August 26, 2008
American Families Bear Large Burden from Corporate Income Tax
Growing Consensus Says Corporate Taxes Are Most in Need of Reform
Washington, DC, August 26, 2008 - Following newly released OECD data that shows U.S. corporate income taxes are 50 percent higher than the OECD average, the Tax Foundation released a revised summary showing that the US federal corporate income tax quietly taps family pocketbooks for nearly $370 billion per year in the form of higher prices, lower wages and poorer return on investment.
The typical family focuses on the more visible taxes such as property taxes on homes, sales taxes on purchases, and personal income and payroll taxes. But in Tax Foundation Tax Watch, "What Do Corporate Income Taxes Cost American Families," Tax Foundation President Scott Hodge puts a price tag on the corporate income tax.
"Most people think corporate income taxes are paid by wealthy, anonymous companies," said Hodge. "But as economists have been teaching for years, ultimately people bear the burden of corporate taxes, not companies. And in 2006 that burden averaged $3,190 per household. That's more than the average household spends on restaurant food, gasoline or home electricity in a year."
Last week, the Tax Foundation launched the CompeteUSA campaign whose goal is to raise the public's awareness of the burden America's business taxes may place on workers through lower real wages and living standards than would have occurred otherwise.
"One of the problems is a lack of understanding that ultimately people pay all taxes," Prante explains. "Politicians like to make corporations appear unworthy of any tax relief, but it is individuals such as shareholders and workers that ultimately pay the corporate income tax."
An October 2007 Tax Foundation Fiscal Fact No. 106, "Personalizing the Corporate Income Tax," Hodge and Prante found that the lowest-income households bear a large corporate tax burden. In fact, for the poorest 20 percent of households, corporate income taxes are more of a burden than individual income taxes.
"What this means is that cutting corporate tax rates is not about handing money to U.S. companies," Hodge pointed out. "It is about providing tax relief to American families and helping boost real wages and living standards for American workers."
To learn more about CompeteUSA, go to http://www.taxfoundation.org/competeusa/.
The Tax Watch report can be found at http://www.taxfoundation.org/files/corporate_income_taxes_cost_families-20080818.pdf.
The October 2007 report from Hodge and Prante can be found at http://www.taxfoundation.org/research/show/22694.html.
The Tax Foundation is a nonpartisan, nonprofit organization that has monitored fiscal policy at the federal, state and local levels since 1937.
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To set up an interview to discuss corporate income taxes, please contact Matt Moon, the Tax Foundation's Manager of Media Relations, at (202) 464-5102.
