Adam Michel of the Heritage Foundation joined Thursday’s “The Morning Blaze with Doc Thompson” to talk about why tax reform will help Americans. He explained why corporate taxes get passed on not only to consumers but also to workers, meaning that higher taxes result in lower wages.
President Donald Trump last month unveiled a new tax plan that would cut the corporate tax rate from 35 percent to 15 percent along with streamlining the number of tax brackets from seven to three. Advocates for “income equality” often call for higher taxes on large corporations, but they don’t realize who ends up paying the price for those taxes.
“The corporate income tax is a horrible, horribly designed tax that double-taxes a lot of income,” Michel said. “We know that businesses don’t actually pay taxes; it’s just that the cost of them is passed on to people that work for them, to consumers, to investors.”
When the government imposes high taxes, companies and individuals lose profit and incentive to hire more workers, Michel explained. Fewer jobs are available, and workers get a pay cut.
“Without being able to actually see that physically, it’s hard for people to sort of think through how destructive the business taxes are to their paycheck,” he said.