Corporate Tax Cuts Don't, Ultimately, Benefit Businesses

It is a commonly held, even if completely wrong, conviction that corporations pay taxes and that tax reform will benefit only the rich. As Congress now seems poised to reform America’s tax code for the first time since the 1980s, liberals are out in-force to strike fear into the hearts of millions of Americans about a tax cut for the rich and an exploding deficit. Never-mind that Democrats have never given a dang about the deficit and debt, or the fact that corporations don’t truly pay taxes, Democrats are desperately parroting their talking points.


The reality is that tax reform will not, ultimately, benefit corporations so much as American consumers, and that deficits will not explode due to tax cuts. Corporate taxation is not borne by the big shots in the board room; it is paid by working men and women each and every time they buy a loaf of bread, a suit of clothes, or Corn Flakes for the kids. Corporations merely pass their tax costs on to consumers in the form of higher prices. Economists have estimated that consumer goods are roughly 20% higher due to embedded corporate taxes at current rates.

If corporate tax rates are cut, prices for consumers at the check-out counter will fall. This is a mathematical certainty, as the free-market motivation will be for corporations to cut their prices commiserate with tax reductions in an effort to outperform competitors from a price perspective. This means that the so-called “tax cut for the rich” will actually mean a pay raise for working families fighting to put food on the table. Tax cuts will benefit the middle and lower income brackets the most, even as corporations have a healthier bottom line.

Additionally, the proposed tax cuts will stimulate economic growth, which will drive-up the nation’s GDP. By reviving the nation’s economic engine, real tax reform will actually increase revenue to Washington even at a lower tax rate. This was well explained as the “Laffer Curve” during the Reagan tax cuts in the ’80s; the lower the tax rate, the stronger the economy, the higher the revenue to government even as the private sector prospers. Liberal crocodile tears about a run-away deficit are nothing more than political propaganda.


Real tax reform will lower costs for consumers, create millions of American jobs, raise our standard of living, and make us the economic envy of the world all over again. So what is Washington waiting on anyway?


Join the conversation as a VIP Member

Trending on RedState Videos