October 25, 2007
New Study Highlights High U.S. Corporate Tax Burden, Calculates Cost by Congressional District
Average Corporate Tax Burden per Household: $2,757
Communities across America are paying the price for the United States' high corporate income tax rate, according to a study released today by the Tax Foundation.
"Increasing global competition has continued to change the marketplace," said Tax Foundation president and study co-author Scott A. Hodge. "There is growing reason to believe that the corporate tax burden falls most heavily on workers and families. Policymakers need to consider this carefully and should take steps to ensure that the U.S. is more competitive in the global marketplace."
Typically, the arguments for cutting the U.S. corporate tax rate center on improving the ability of American firms to compete globally and making the U.S. more attractive for investment by foreign firms. While valid, these arguments overlook who actually bears the economic burden of the corporate tax and who will benefit most from cutting corporate taxes—American workers, investors, and consumers. Conventional wisdom has indicated that corporate taxes impacted stockholders with lower dividends, workers with lower wages and consumers with higher prices close to equally. Recent research has indicated that the burden is now falling mostly on workers, driving down wages.
Additionally, the United States' top statutory corporate tax rate is the 2nd highest in the industrialized world and is one of only two OECD countries to have not cut its rate since 1994. Five countries cut their corporate income tax rates in 2006, seven more will have cut their rates by the end of this year, and Germany recently announced a planned cut on January 1, 2008. U.S. lawmakers should consider enacting a substantially lower federal corporate income tax rate. Taking into account state-level corporate income tax rates (which don't exist in most other nations), the cut would have to be at least 10 percentage points to get the U.S. rate down to the OECD average.
The study calculates the corporate tax burden borne by families in each Congressional district. A full list of all 435 districts is available online at: http://www.taxfoundation.org/publications/show/22691.html.
Top and Bottom 10 Corporate Tax Burden by Congressional District, 2005
Rank | State | District | Member | Political | Average Corporate Income Tax Burden Per Household | Total Corporate Tax Burden for Households in District ($thousands) |
| U.S. Total |
| N/A | N/A | $2,818 | $319,800,000 |
1 | NY | 14 | Maloney | D | $11,460 | $3,894,139 |
2 | CA | 14 | Eshoo | D | $10,118 | $2,549,602 |
3 | CT | 4 | Shays | R | $9,035 | $2,347,969 |
4 | CA | 30 | Waxman | D | $8,707 | $2,526,602 |
5 | NY | 18 | Lowey | D | $8,001 | $1,930,678 |
6 | IL | 10 | Kirk | R | $7,923 | $1,919,647 |
7 | NY | 8 | Nadler | D | $7,820 | $2,508,569 |
8 | FL | 22 | Klein | D | $7,111 | $2,146,948 |
9 | CA | 48 | Campbell | R | $6,677 | $1,828,024 |
10 | NJ | 11 | Frelinghuysen | R | $5,899 | $1,465,312 |
| ||||||
427 | NC | 1 | Butterfield | D | $1,420 | $352,344 |
428 | AR | 1 | Berry | D | $1,400 | $388,069 |
429 | TX | 29 | Green | D | $1,400 | $285,710 |
430 | AL | 7 | Davis | D | $1,389 | $350,255 |
431 | MS | 2 | Thompson | D | $1,388 | $364,036 |
432 | OK | 2 | Boren | D | $1,377 | $384,350 |
433 | MO | 8 | Emerson | R | $1,370 | $366,247 |
434 | WV | 3 | Rahall | D | $1,292 | $323,113 |
435 | KY | 5 | Rogers | R | $1,167 | $318,504 |
436 | NY | 16 | Serrano | D | $963 | $227,132 |
The full report, Tax Foundation Fiscal Fact No. 106, is available online at: http://www.taxfoundation.org/publications/show/22694.html.
The nonpartisan, nonprofit Tax Foundation has monitored tax policy at the federal, state and local levels since 1937. Best known for its annual calculation of Tax Freedom Day®, the Tax Foundation is a nonprofit, nonpartisan 501(c)(3) organization.