Biden’s Tax Hikes Cost $1,650 per Household

A new study by the Heritage Foundation finds that Joe Biden’s plan to hike the corporate tax rate to 28 percent will reduce long-run GDP by about 1 percent - meaning a cost of about $1,650 per American household. With today’s ALG Minute, I’m Catherine Mortensen. But that’s not all. Heritage economist Parker Sheppard also finds the higher tax rate harms both shareholders and workers. Wages will fall by about 1.27 percent as less investment lowers productivity. Who actually pays the tax? Economic theory shows that the actual costs of taxation are not necessarily borne by whomever statutorily pays the tax. This is because taxes raise costs, and people adjust their behavior in response to the new cost. The exact shares of the burden that fall on capital and labor are a point of debate in the literature, but there is agreement that it is not just corporate shareholders that pay the tax.

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