Now that Kamala Harris is the official Democratic candidate for president, a look at her tax proposals is in order.
According to a Harris-Walz press release that lays out her agenda to lower costs for American families, some of the tax proposals are:
- Tax incentive for homebuilders who build starter homes sold to first-time homebuyers.
- Expansion of the existing tax incentive for businesses that build affordable rental housing.
- Provide working families who have paid their rent on time for two years and are buying their first home up to $25,000 in down-payment assistance, with more generous support for first-generation homeowners.
- Expand the Child Tax Credit to provide a $6,000 tax cut to families with newborn children.
- Expand the Earned Income Tax Credit to cover individuals and couples in lower-income jobs who aren’t raising a child in their home.
The Committee for a Responsible Federal Budget has estimated that Harris’s tax proposals “would increase deficits by $1.7 trillion over a decade” and “that figure would grow to $2.0 trillion if temporary housing policies were made permanent.” The Harris campaign maintains that “this would be paid for through taxes on corporations and high earners and that they support the revenue raisers in the President’s Fiscal Year (FY) 2025 budget.”
In President Biden’s proposed 2025 budget, the top corporate tax rate would increase from 21 to 28 percent, and the top individual tax rate would increase from 37 to 39.6 percent.
Just recently, Harris campaign spokesman James Singer told NBC News that she would push for a 28 percent corporate tax rate, calling it “a fiscally responsible way to put money back in the pockets of working people and ensure billionaires and big corporations pay their fair share.” At least she didn’t call for fully repealing Trump’s tax cuts — like she did in her failed 2020 presidential campaign — which would return the corporate rate to its high of 35 percent.
According to Kyle Pomerleau of the Tax Foundation, a 28 percent federal corporate rate, coupled with state corporate tax rates, would be the second highest in the 38-member-country Organisation for Economic Co-operation and Development (OECD).
Harris is not alone. Some “conservatives” likewise want to see the corporate income tax rise.
At the National Conservatism Conference held in July in Washington, D.C., Senator Josh Hawley (R–Mo.) told the audience that “Trump’s 2017 cut of the corporate income-tax rate to 21 percent is at the top of the list of economic policy mistakes.” Oren Cass of American Compass — a conservative think tank “developing the conservative economic agenda to supplant blind faith in free markets with a focus on workers, their families and communities, and the national interest — calls for the full expiration of the 2017 Trump tax cuts and the increase in the corporate rate.
Americans not versed in basic economics are susceptible to proposals to increase the corporate income tax because it is a hidden tax. After all, corporations can “afford it” if their corporate tax rate is raised, and no one’s individual income taxes would be affected. And as Doug Casey recently said: “The Dems are talking about raising the corporate tax. But since the average guy doesn’t pay corporate tax, he couldn’t care less. In fact, he hates corporations. He’s been taught to think of them as greedy exploiters. So, the average guy is just fine with corporate taxes being raised to any level you’d like.”
The same fallacies are behind the ballot measure in Oregon this November to institute a statewide universal basic income (the “Oregon People’s Rebate”) that would give every Oregon resident, regardless of age or income, $1,600 each year — as long as they live at least 200 days in the state. The measure would be funded by an extra tax on the gross receipts of corporations that generate more than $25 million in annual sales. This is in addition to the 7.6 percent corporate income tax and a 0.57 percent gross receipts tax that Oregon corporations already pay. (Oregon is one of only two states [along with Delaware] to impose both a corporate income tax and a gross-receipts tax).
Two things should be noted regarding the corporate income tax: (1) Corporations don’t pay taxes; people do, and (2) Raising the corporate income tax rate doesn’t mean that corporations will bear the burden of the increased tax that will be due.
Corporations are owned by shareholders: pension funds, 401k plans, institutional investors, and individual shareholders. The corporate income tax is just another government mandate that raises the corporation’s cost of doing business. Sometimes these mandates take the form of taxes — like the unemployment tax and the employer share of Social Security and Medicare taxes — and sometimes they take the form of regulations — like the minimum wage, health-insurance mandates, family-leave requirements, and antidiscrimination laws.
The corporate tax burden is borne by shareholders through lower dividends and share prices, passed along to consumers through higher prices, and paid by workers in the form of lower wages.
Like tariffs, the corporate income tax is a hidden tax. Walmart, Target, and Costco don’t add a surcharge at the cash register on every item sold to cover increases in tariffs and taxes. The economic weight of a tariff, tax, regulation, or anything else that increases a corporation’s cost of doing business is shifted to shareholders, consumers, or workers.
What is so insidious about the corporate income tax is that it is also a double tax: corporate profits are taxed at the corporate level and then taxed again when dividends are paid to shareholders.
Businesses in America shouldn’t have to pay taxes any more than individuals should have to. The federal government is not entitled to the profits of corporations any more than it is entitled to the incomes of individuals.