The poorest 20% of U.S. households pay more in corporate income taxes each year than they do in individual income taxes.

That’s the word from the Tax Foundation in its new public awareness campaign called ”CompeteUSA.”

That’s right: individuals pay corporate taxes, not corporations, says the organization’s head of economic policy Rogert Carroll (right).

“Business remits the tax, but people pay it,” he says.

Carroll identifies three groups of individuals who put up the money for “corporate taxes”:

• Workers pay in the form of lower wages because some of their employers’ income goes to taxes, not pay
• Consumers pay in the form of higher costs for goods and services
• Investors pay in the form of lower return on their investment.

As for that claim about the poor paying so much in corporate tax: “Corporate taxes were 6.3% of low-income households’ tax bills last year compared to just 4% for individual income taxes,” says the Tax Foundation is a 71-year-old nonpartisan, nonprofit in Washington D.C. that monitors fiscal policy at all levels of government.

Carroll denies that the group is anti-tax; it just wants Americans to understand the consequences of taxing “the other guy” or “the rich.”

It’s no coincidence that the campaign will run through the November elections that will choose the members of Congress who will determine whether the tax cuts of 2002-2003 will be extended or allowed to end, in effect a tax hike.

In addition to the Web site, the CompeteUSA campaign will run cable TV ads, Web ads, release of new studies about faltering U.S. global competitiveness and dissemination of opinion pieces.

“This campaign is directed outside the (Washington D.C.) Beltway,” Carroll said. “We think it’s important to change the way people think about corporate income tax.

“Fundamentally, it’s about living standards,” he adds. ”One of the drivers of higher living standards is productivity growth and one of the drivers of productivity growth is capital investment. In a global economy, capital moves around the world where it gets the best return, but (most) workers don’t move.

Here are some more details:

• The federal corporate income tax  collected $370 billion in 2007, according to a Tax Foundation study. That’s an average household burden of $3,190 per year — more than the average household spends on restaurant food, gasoline or home electricity in a year.
• 70% of corporate tax burdens fall on domestic workers through lower real wages, while the remaining 30% fall on company shareholders, says a 2006 working paper by the non-partisan Congressional Budget Office.
• Households earning under $23,700 in 2004 paid on average $271 in corporate income taxes, compared to just $171 in individual income taxes.

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Posted in: Jobs • Taxes • Top posts • corporate taxes • Tax Foundation |

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