Vice President Harris has put forward an economic plan which she claims would help the middle-class and cut taxes for working people. She is promising that no one earning less than $400,000 a year will pay more in taxes under her plan.
Yet Harris is proposing to increase the corporate tax rate by 33% to 28%, a trillion dollar tax increase that most economists and tax policy experts agree would get passed along to workers, consumers, and savers, hitting millions of households at every income level.
Two separate studies by the nonpartisan Congressional Joint Committee on Taxation and the Biden-Harris administration’s own Treasury Department show that a 28% corporate tax rate would raise taxes on millions of taxpayers earning less than $400,000 a year.
The study by the Joint Committee on Taxation is a distributional analysis showing the effects on tax returns of raising the rate to 28%. The analysis shows that the proposal would increase taxes on 108 million households in the first year and on 172 million taxpayers by year ten. According to the analysis, 98% of the households with tax increases have incomes of less than $500,000.
The study further shows that 92 million taxpayers earning less than $200,000 a year would face tax increases in the first year. Within ten years, 155 million taxpayers earning less than $200,000 would be paying higher taxes due to the 28% corporate rate.
A separate study by the Treasury Department’s Office of Tax Analysis also shows that a corporate tax rate hike would cost middle-class taxpayers. According to the study, a 28% tax rate would raise $1.35 trillion over ten years. Approximately 36% of this tax increase, or about $500 billion, would fall on taxpayers earning less than $310,680 a year. That’s a $500 billion tax increase on middle-class taxpayers.
The Joint Committee report notes that a higher corporate rate affects workers’s wages and shareholder values. But Wall Street Journal tax reporter Richard Rubin recently wrote that “Democrats ignore the effects of corporate tax increases on middle-class workers and shareholders.”
These two studies show what economists have long known and politicians have long ignored, that a corporate tax rate income would hit taxpayers at every income level, including millions of middle-income working people earning less than $400,000 a year.
