Who Will Really Pay for the Proposed Corporate Tax Increases?

The U.S. Treasury Department calculates that roughly half of the corporate income tax is borne by families earning less than $400,000 in annual income. These families will bear the cost of any increase in corporate taxes.

Even though a corporation physically writes the check to the Internal Revenue Service when it pays its taxes, a corporation is only a legal fiction — a form of doing business. Just like rent, salaries, and other expenses of doing business, corporations pass the cost of taxes on to people.

All economists agree that people — and not legal entities — bear the cost of taxes. The bottom line is that the true burden of the corporate income tax is on all Americans. The corporate income tax results in workers being paid lower wages, savers earning less on their retirement accounts, and people paying higher prices for the goods and services produced by corporations.

Economists universally agree that a substantial share of the corporate tax is ultimately paid by workers in the form of lower wages.