Shocking Tax Increase: Here’s What You Need to Know About Harris’ Big Corporate Plan!

In the midst of proposed tax increases, Vice President Kamala Harris’s plan to raise the corporate income tax rate from 21 percent to 28 percent stands out as the most significant change. Advocates of this tax hike argue that it is a responsible way to return money to the pockets of working individuals, but the reality is more complex.

1. Impact on Workers:
   • The Alliance for Competitive Taxation (ACT) predicts that this tax increase could lead to a substantial decrease in average wages, potentially costing US workers up to $597 annually.
   • Economists have long recognized that an increase in corporate taxes can have a negative impact on workers, as it may lead corporations to reduce investments, resulting in lower wages and limited job opportunities.
2. Distribution of Tax Burden:
   • Studies suggest that workers typically bear at least half of the corporate tax burden, with the rest affecting shareholders and consumers.
   • Recent research by economists Liu and Altshuler indicates that around 60 percent of the corporate tax is borne by workers in the form of reduced wages.
3. Economic Consequences:
   • Raising the corporate tax rate to 28 percent could lead to a total wage loss ranging from $34 billion to $81 billion per year, impacting an average US worker by $249 to $597 annually.
   • Different states would experience varying degrees of wage loss, with workers in states like California, Massachusetts, and New York facing some of the highest average wage reductions.
4. Overall Impact:
   • In the long run, Harris’s proposal to increase the corporate tax could result in a reduction of full-time equivalent jobs, lower wages by 0.5 percent, and shrink GDP by 0.6 percent.
   • The broader tax plan could eliminate 786,000 jobs, reduce wages by 1.2 percent, and decrease GDP by 2 percent, with the most damaging aspect being the corporate tax rate hike.

Therefore, it is evident that Harris’s plan to raise the corporate tax rate significantly may have detrimental effects on workers, leading to lower wages, fewer job opportunities, and overall economic slowdown. When exploring ways to fund initiatives, it is crucial for policymakers to consider alternatives that are less harmful to the workforce.