Who Pays the Corporate Income Tax?


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.

THANK YOU.

We recently wrapped up the crowdfunding campaign for our ambitious Mother Jones Corruption Project, and it was a smashing success. About 10,364 readers pitched in with donations averaging $45, and together they contributed about $467,374 toward our $500,000 goal.

That's amazing. We still have donations from letters we sent in the mail coming back to us, so we're on pace to hit—if not exceed—that goal. Thank you so much. We'll keep you posted here as the project ramps up, and you can join the hundreds of readers who have alerted us to corruption to dig into.

We Recommend

Latest

Sign up for our newsletters

Subscribe and we'll send Mother Jones straight to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate

Share your feedback: We’re planning to launch a new version of the comments section. Help us test it.