Arizona, Tax Reform, Taxes, Budget, Employees, Labor
Raising the Corporate Income Tax...Who Really Pays?
The Tax Foundation, a non-partisan research group conducted a study and found a causal relationship between states with comparatively low corporate taxes and rising employee wages.
The study specifically found that for every dollar reduction in state-local corporate income taxes resulted in a $2.50 rise in employee wages.
Unfortunately they found the converse to be true as well - for every one-dollar rise in corporate income taxes resulted in a $2.50 loss in employee wages.
Further, the study even found that states with low corporate tax rates have seen an increase in worker productivity.
Lately however, we seem to hear the rhetoric of “let’s tax the rich fat cats since they can afford to give a little more” drowning out any other voice of reason.
Unfortunately if the goal is to boost revenues, then this approach fails miserably. Instead of helping those they argue who need it the most, they end up hurting them by driving down employee wages.
And most states are paying attention…at least in 2009.
Of the 17 States in the U.S. that raised taxes in 2009, none of them raised their corporate income taxes. Interestingly, nine of the 17 tax raising states raised the individual income tax before going after the corporate income tax. Perhaps they know something the rhetoricians don’t?
The real question we must ask is not how can we burden corporations with more taxes, but how best can the corporate tax burden be divvied up amongst those who are in reality impacted by higher corporate taxes - workers, consumers and investors?
Without answering those questions we’re merely harming those we claim we’re helping - employees.
The study specifically found that for every dollar reduction in state-local corporate income taxes resulted in a $2.50 rise in employee wages.
Unfortunately they found the converse to be true as well - for every one-dollar rise in corporate income taxes resulted in a $2.50 loss in employee wages.
Further, the study even found that states with low corporate tax rates have seen an increase in worker productivity.
Lately however, we seem to hear the rhetoric of “let’s tax the rich fat cats since they can afford to give a little more” drowning out any other voice of reason.
Unfortunately if the goal is to boost revenues, then this approach fails miserably. Instead of helping those they argue who need it the most, they end up hurting them by driving down employee wages.
And most states are paying attention…at least in 2009.
Of the 17 States in the U.S. that raised taxes in 2009, none of them raised their corporate income taxes. Interestingly, nine of the 17 tax raising states raised the individual income tax before going after the corporate income tax. Perhaps they know something the rhetoricians don’t?
The real question we must ask is not how can we burden corporations with more taxes, but how best can the corporate tax burden be divvied up amongst those who are in reality impacted by higher corporate taxes - workers, consumers and investors?
Without answering those questions we’re merely harming those we claim we’re helping - employees.