Who Pays the Corporate Income Tax?

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Who pays the corporate income tax? Corporations, obviously. That’s like asking who’s buried in Grant’s tomb. One way or another, though, actual people have to ultimately pay the tax. Consumers pay it if companies respond to corporate taxes by raising the price of their products. Workers pay the tax if corporations respond by lowering wages. Shareholders pay the tax if it simply eats into profits and lowers share prices.

But which is it? Bruce Bartlett reports today that the March issue of the National Tax Journal has four articles that address this question. Here are the answers:

  • Article #1: Shareholders pay 100 percent.
  • Article #2: Shareholders pay 100 percent.
  • Article #3: Shareholders pay 40 percent, workers pay 60 percent.
  • Article #4: Shareholders pay 82 percent, workers pay 18 percent.

The old saw says that if you ask ten economists about something, you’ll get 11 answers. By simple arithmetic, this suggests that if you ask four economists, you’ll get 4.4 answers. But in this case we only got three. Not bad!

So what’s the real answer? By using the blogger’s expedient of simply averaging all the responses, it looks like shareholders end up paying 80 percent of the corporate income tax. That’s probably close enough for water cooler arguments, anyway.

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SIX TRUTHS

Reclaiming power from those who abuse it often starts with telling the truth. And in "This Is How Authoritarians Get Defeated," MoJo's Monika Bauerlein unpacks six truths to remember during the homestretch of an election where democracy, truth, and decency are on the line.

Truth #1: The chaos is the point.

Truth #2: Team Reality is bigger than it seems.

Truth #3: Facebook owns this.

Truth #4: When we go to work, we're in the fight.

Truth #5: It's about minority rule.

Truth #6: The only thing that can save us is…us.

Please take a moment to see how all these truths add up, because what happens in the weeks and months ahead will reverberate for at least a generation and we better be prepared.

And if you think journalism like Mother Jones'—that calls it like it is, that will never acquiesce to power, that looks where others don't—can help guide us through this historic, high-stakes moment, and you're able to right now, please help us reach our $350,000 goal by October 31 with a donation today. It's all hands on deck for democracy.

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