New Podcast on the Incidence of Corporate Taxes

We have posted a new Tax Foundation Podcast interview with Dr. William Gentry. a professor of economics at Williams College in Massachusetts. Dr. Gentry recently wrote a paper for the Treasury Department titled A Review of the Evidence on the Incidence of the Corporate Income Tax.

In this podcast, Dr. Gentry and Tax Foundation Vice President for Economic Policy Robert Carroll discuss the incidence of corporate taxes—that is, who bears the burden of corporate taxation.. Dr. Gentry discusses the growing academic evidence that suggests the burden of the corporate tax is increasingly falling on labor and impacting workers directly.

The podcast is 14 minutes, 26 seconds.

Click here to listen.  Click here for more on corporate taxes.

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The Tax Foundation has estimated what the revenue impact of an income tax rebate of the 10% rate would be in 2008. Media reports suggest this may be one component of President Bush's plan to stimulate the economy. Taxpayers would receive a rebate check, likely based on their 2006 tax returns. The 10% rate would be set to zero when taxpayers file returns for tax year 2008. The summary of our results:

• Under a baseline assumption of no AMT patch (current law), reducing the 10% rate to zero would cost approximately $58 billion for calendar year 2008 (static score).
• Under a baseline assumption of an AMT patch, reducing the 10% rate to zero would cost approximately $96 billion for calendar year 2008.
• Reducing the 10% rate to zero would push about 11 million more returns into AMT for 2008 (under current law) and raises the price of an AMT patch for 2008 from $55 billion to $93 billion.
• Approximately 29.6% of tax returns (representing 41.2 million of the nation's projected 139 million tax returns in 2008) are scheduled to pay nothing in federal individual income taxes in 2008 and would therefore receive no savings by a mere reduction in the 10% rate.
• Currently, 41.2 million returns pay nothing in federal individual income taxes in 2008, and reducing the 10% rate to zero for 2008 would increase this number to 62.9 million.
• Due to the non-payers and because high-income individuals are more likely to be married, 21.2 percent of the tax savings from the reduction will go to those tax returns earning over $100,000, despite the fact that they make up only 13.8 percent of tax returns. (Assumes AMT patch baseline). However, ignoring the non-paying taxpayers, this reduction would make the tax code more progressive, because those making $60,000 receive greater savings as a percentage of their incomes as compared to those making $1 million.

Click here to read the full analysis. Click here for more Tax Foundation discussion of the stimulus proposals.

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