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Things To Consider
The Congressional Budget Office
Households bear the burden of corporate income taxes, but the extent to which they bear that
burden as owners of capital, workers, or consumers is not clear.
Households also bear the burden of the taxes paid by businesses. In particular, in CBO’s judgment
(and that of most economists),
employers’ share of payroll taxes is passed on to employees in the form of lower wages.
The domestic distortions that the corporate income tax induces are large
compared with the revenues that the tax generates. That finding is independent of how
the United States’ corporate income tax compares with the taxes imposed by other countries.
Taxes – including corporate income taxes – distort incentives, primarily by taxing
endeavors uneavenly. When two kinds of economic activity are taxed at different rates,
the more highly taxed activity tends to diminish and the less heavily taxed activity expands.
Once economic activity takes on a pattern that is based on tax rates, resources in the economy
are misallocated and inefficiency results, as economic activity shifts away from its
most valuable opportunities.
The bulk of the (government) revenue increase was associated with corporate income taxes:
Revenues from corporate income taxes rose from 1.2 percent of GDP in 2003
(their lowest level since 1983)
to 2.7 percent in 2006 (their highest level since 1978).
Roughly two-thirds of the increase of 1.5 percentage points in corporate income taxes
relative to GDP can be attributed to increases in corporate profits…
Regardless of how they are levied, taxes are paid by individuals, not by corporations.
Various theories have been advanced to explain how the burden of the corporate income
tax might be borne by workers, owners of corporate capital, or owners of capital generally.
Since the nation’s capital stock is owned primarily by people at the upper end of the
income distribution, the tax falls most heavily on the wealthy and is therefore progressive.
The incidence of the corporate income tax is uncertain and various models suggest
that at least some of the tax is borne by labor income, in which case the tax would not
be as progressive as shown in CBO’s analysis.
Things To Consider
Many of the companies Bain invested in grew, and added jobs, but some downsized or
went bankrupt. As Robert Gavin wrote for the Boston Globe in 2008:
“It’s impossible to say precisely if more jobs were created than cut by Bain since the firm
does not track employment in its investments.
To be sure, Bain has invested in companies that have added thousands of jobs.
For example, early on, Bain invested in the office supply
store Staples, which now employs more than 90,000 people.
But some companies cut jobs. For example, Politico noted that in 1992,
Bain acquired the firm American Pad & Paper, and that by 1999 two American
plants were closed and 385 jobs had been cut.
Again, that doesn’t mean Restore Our Future and Romney’s claims about net job
creation aren’t accurate. Bain officials told the Boston Globe the companies in which
they invested added more jobs than they cut. It just means no one has produced an
analysis to substantiate a firm number one way or the other.
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