Virginia has a car tax. Does the car pay the tax? In most political jurisdictions, there’s a property tax. Does property pay the tax?…What about a corporation? As it turns out, a corporation is an artificial creation of the legal system and, as such, a legal fiction. A corporation is not a person and therefore cannot pay taxes. When tax is levied on a corporation, who pays it?
A valid question. One whose answer seems almost too obvious:
One response is to raise the price of its product, so customers share part of the burden. Another response is to lower dividends, so shareholders share a part of the burden. And a considerable portion of reduced dividend burden falls on ordinary nonrich people…Therefore, it is people, not some legal fiction called a corporation, who bear the burden of the tax.
Really!?!? So how bad is it?
In 1980, Joseph Stiglitz, now a Nobel laureate, said that workers share the highest corporate tax burden in the form of lower wages. A number of economic studies, including that of the Congressional Budget Office, show that workers bear anywhere from 45% to 75% of the corporate tax burden.
Armed with such facts, perhaps the whole debate over corporate taxes can take a new direction–at least for workers, it is time to demand higher wages!