Benefits to cutting corporate tax rate

Too often, I've heard politicians demonizing businesses and in particular advocating milking corporations to provide "free" goodies. Mrs. Clinton at the GM plant recently is the latest example.

Nothing is "free." Citizens end up paying for these "freebies," not corporations. The U.S. corporate tax rate is now the second highest among Organization for Economic-Cooperation and Development (OECD) nations. The federal corporate tax rate of 35 percent is as much as 10 percentage points higher than the average corporate tax rate among European Union countries.

As taxes are factored into a product's cost, this makes American products less competitive. This doesn't help the U.S. trade deficit. Arguments for cutting the corporate tax rate include improving American firms' ability to compete globally. This argument overlooks who actually bears the economic burden of corporate taxes and who will benefit most from cutting corporate taxes -- American workers, investors, and consumers. Corporate taxes fall on consumers through higher prices, workers through lower wages, or shareholders through smaller dividends.

Dividends aren't just for the rich. Over 50 percent of workers or their pension funds own stocks.

Corporate taxes are passed on through higher prices, so consumers pay more. If corporations cannot pass on taxes, workers suffer though lower wages or worse, by losing their jobs.

Tax Foundation economists Andrew Chamberlain and Gerald Prante found that low-income households bear a startlingly large share of the corporate tax burden.

Geographically, households in largely urban congressional districts and metropolitan areas bear a disproportionate share of corporate income taxes today and would receive a significant boost in living standards if the corporate tax burden were reduced.

Reduce the corporate tax rate and help workers, consumers and investors.

Dean Myles

Aurora