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Corporate taxes don't raise prices, but they do undermine economic growth

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While the economic effects of personal income taxes are contentious, the ramifications of those on corporations are clear and unassailable.

For example, the Adam Smith Institute commissioned a review on the economic literature of corporate taxation, and found that on average, workers bear 57.6 percent of the financial burden. The rest of the economic brunt slices into capital, and though the extent of that is debatable, with the Economic Policy Institute estimating that about 3/4 of it slices into capital, its impact is great. So not much of corporate taxation parlays into higher prices, but that only serves to mask the effects, and foster demagoguery.

As the Tax Foundation reports: "Every major study published in peer-reviewed journals finds the corporate tax harms economic growth." During a time when major companies are fleeing the United States, which has the highest nominal corporate tax rates in the world, it is worth considering the prosperity that reducing corporate tax rates could usher in. This can be accomplished via mere rate reductions, or eliminating the myriad loopholes and business kickbacks that plague the system.

The dynamic of corporate taxation is clear: it undermines the forces behind economic growth. This postulate can be extended to other government financial mechanisms; "More jobs are generated when the cost of capital falls due to lower interest rates and lower capital gains taxes," according to the Mercatus Center. Even Keynesians, who premise their philosophy upon the rule that consumer spending parlays into consumer incomes, should see value in this finding.



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