How Taxing the Rich Harms the Middle Class

If Obama knows this, why does he talk like he does? If he doesn’t, why doesn’t he?

Using data on more than 100 countries, we found that higher corporate taxes lead to lower wages. In fact, workers shoulder a much larger share of the corporate tax burden (more than 100 percent) than had previously been assumed. The reason the incidence can be higher than 100 percent is neatly explained in a 2006 paper by the famous economist Arnold Harberger. [Arnold C. Harberger, “Corporate Tax Incidence: Reflections on What
is Known, Unknown, and Unknowable,” in Fundamental Tax Reform: Issues,
Choices, and Implications, ed. John W. Diamond and George R. Zodrow
(Cambridge, Mass.: MIT Press, 2008)]

Simply put, when taxes are imposed on a corporation, wages are lowered not only for the workers in that firm, but for all workers in the economy since otherwise competition would drive workers away from the low-wage firms. As a result, a $1 corporate income tax on a firm could lead to a $1 loss in wages for workers in that firm, but could also lead to more than a $1 loss overall when we look at the lower wages across all workers.

Leftist-cocoon syndrome of he doesn’t, vote-scavenging if he does.

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