Who Really Pays?

Having gained the majority in both houses of Congress, it is no surprise that the Democrats want to raise taxes. And of course the eeevil capitalist corporations Dems just love to hate are to be among the first to suffer. Hillary, whom we are told is the smartest woman in the world, has just displayed stunning ignorance in the economic realm, but she is just one of many Democrats. WSJ:

In the early 1990s, both the Treasury Department and the American Law Institute recommended removing one layer of our current double taxation of corporate equity capital, which is subject not only to the corporate tax but to investor-level taxes on dividends and capital gains. In 2003, President Bush's tax cuts reduced -- though they didn't eliminate -- this double taxation.

That the corporate tax is inefficient in these ways is not controversial among economists.

A traditionally less-settled question has been one of incidence: Who bears the corporate tax burden? Some may be tempted with a quick answer, "corporations." But that is clearly wrong. The Econ 101 admonition that people pay taxes -- in this case, suppliers of capital through lower returns, workers through lower wages, and/or consumers through higher prices -- remains true even when the tax is aimed at capital. [snip]

Indeed, Mr. Harberger's updated research on the incidence of the corporate tax concluded that labor bears not just the brunt of the tax, but a burden that may be larger than the tax itself.

And we are becoming uncompetitive as our global trade competitors adopt lower tax rates, so Big Labor and the Dems who want higher corporate taxes are shooting themselves in the foot twice.

One of the Left's favorite Lenin quotes is "capitalists will sell us the rope to hang themselves", but it looks like the joke is on Big Labor and the Dems. (What does the law of unintended consequences mean to you?)