Are you paying for your job? Corporate taxes may fall on workers

Congress may make changes on the corporate tax this year, which again stirs the question of who actually pays it.

Workers and shareholders, not corporations, pay taxes, according to a New York Times article. Corporations are nothing more than a legal entity that exist because they are permitted to act as artificial vehicles to sales, wages and profits. People are the backbone for taxes.

Economists reject the idea that corporate taxes are paid by consumers of a company’s product, according to the article.

When the tax first started, it rested completely on the shareholders, according to a 1962 article from an economist at Arnold C. Harberger.

Since then, most economists say it has shifted to the workers paying a portion, though the portion is not agreed on. Laborers pay the cost through lower wages. It came from a chain effect of shrinking capitol in order to raise the rate of return.

While there is still debate from economists about it, the Treasury Department said 82 percent of the corporate tax falls on capital and 18 percent on labor.

EMAIL: alovell@deseretnews.com