Kamala Harris Is Eyeing Your 401(k)
8th October 2024
Kamala Harris keeps changing her tax plan, but her latest proposal is to raise the corporate tax rate to 28%. She would also raise the top capital-gains tax to roughly 32%, the highest since the 1970s.
Extracting money from those big and faceless corporations with profits in the tens of billions of dollars has populist appeal. But the more accurate way to think of the corporate income tax is that it puts Uncle Sam first in line to take a share of all the profits an American corporation earns. Only after the government takes its pound of flesh does anyone else get a return on his money.
At a 28% federal corporate tax and an average of roughly a 5% state and local tax, the government would snatch away roughly 33 cents of every dollar of profit. This leaves 67 cents to the shareholders. Those include the more than 100 million Americans who own stock directly or through pension and other retirement funds. Every percentage point that Congress and Ms. Harris raise the tax would dilute the value of the stock owned by the rest of us.
Reminder for the dim-witted: Corporations do not pay tax. Corporations merely collect tax. Taxes are an expense to corporations, and (like any other expense) are folded into the price that customers pay for the product or service that the corporation sells. The customer pays ‘corporate’ income tax, and taxing corporations is just another method for government to dip it’s hand into the ordinary citizen’s pocket, something that Democrats have been perfecting since Tammany Hall.