Kamala Harris wants to hike the current 21% federal corporate income tax rate to 28%, higher than communist China’s 25% and the EU average of 21%, her campaign said Monday.
The Kamala Harris federal 28% rate is higher than the Asia average corporate tax rate of 19.8%, the EU average of 21%, the world average of 23.5%, and the OECD average of 23.7%. (See the Tax Foundation’s comprehensive listing here.)
The Kamala Harris federal 28% rate is also higher than Canada (26.2%), the UK (25%) Sweden (20.6%), and even Russia (20%), Afghanistan (20%), and Iraq (15%).
After adding state corporate income taxes, the combined federal-state tax burden in most states will easily exceed 30% under the Harris plan.
The Harris rate hurts the USA vs. China with its 25% rate. And note: Industry sectors of strategic use to the Chinese government pay an even lower rate of 15%.
“Not only will the latest Harris tax hike kill jobs, hurt wages, and raise prices even further, it will harm America’s international competitiveness,” said Grover Norquist, president of Americans for Tax Reform.
Harris has repeatedly vowed to repeal the Tax Cuts and Jobs Act signed into law by President Donald Trump in 2017. Examples of how Trump’s corporate tax rate reduction to 21% helped Americans can be found here.
American workers will bear the brunt of the Harris corporate tax increase.
According to Stephen Entin of the Tax Foundation, workers bear an estimated 70 percent of the corporate income tax. He wrote in 2017:
“Over the last few decades, economists have used empirical studies to estimate the degree to which the corporate tax falls on labor and capital, in part by noting an inverse correlation between corporate taxes and wages and employment. These studies appear to show that labor bears between 50 percent and 100 percent of the burden of the corporate income tax, with 70 percent or higher the most likely outcome.”
A 2012 Harvard Business Review piece by Mihir A. Desai notes that raising the corporate tax lands “straight on the back” of the American worker and will see a decline in real wages.
A 2012 paper at the University of Warwick and University of Oxford found that a $1 increase in the corporate tax reduces wages by 92 cents in the long term. This study was conducted by Wiji Arulampalam, Michael P. Devereux, and Giorgia Maffini and studied over 55,000 businesses located in nine European countries over the period 1996-2003.
The non-partisan Joint Committee on Taxation affirmed in congressional testimony that corporate tax rate hikes hit “labor, laborers.”
Testifying before the House Ways & Means Committee, JCT’s Thomas A. Barthold said:
“Literature suggests that 25% of the burden of the corporate tax may be borne by labor in terms of diminished wage growth.”
Even the left-of-center Tax Policy Center estimates that 20 percent of the burden of the corporate income tax is borne by labor.
While Harris likes to pretend her tax increases only concern the likes of Scrooge McDuck and Rich Uncle Pennybags, everyone gets hit.