Do the Well-Off Really Not Pay Their Fair Share Of Taxes?
3rd October 2021
The Hill tells The Truth for a change.
A recent Internal Revenue Service (IRS) survey found that 95 percent of Americans believe it is everyone’s civic duty to pay their fair share of taxes. They also believe the current system is unfair, largely benefitting big business and rich people. But the truth is American business pays 93 percent of the nation’s taxes, and the top 1 percent pay over one-third of income taxes.
In actuality, corporate taxes are paid by shareholders, workers and consumers, with a substantial share passed on through retail prices or lower wages. As economist Scott Lincicome points out, this can result in lower investment and economic growth, thus reducing wages and living standards, less innovation and lower productivity. An OECD study of major taxes and their impact on economic growth and real wages found that corporate taxes were the most harmful.
But what about tax loopholes and the fact that many big companies do not pay corporate federal taxes? The truth is that the current tax code allows carryforward losses, tax credits for investments in research and development (R&D), investment in equipment and machinery and stock-based employee compensation. These constitute tax avoidance — not tax evasion.