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TaxProf passed along a link to a new paper released by the Treasury’s Office of Tax Analysis authored by William Gentry of Williams College. The title of the paper is titled “A Review of the Evidence on the Incidence of the Corporate Income Tax” (pdf link) and discusses the evidence that corporate taxes falls disproportionately on labor rather than capital. That’s a fancy way of saying that workers, rather than investors, bear the brunt of corporate taxes.

As I discussed in my article “Who Pays Business Taxes?” a corporation cannot possibly be the person that is economically harmed by corporate taxes because the corporation doesn’t really exist. The cost of the tax is passed on to either customers, employees, or investors. In this case, Mr. Gentry believes that employees are the ones mostly paying the tax.

The Treasury’s Office of Tax Analysis is a political office and the Administration is pushing a corporate tax cut, so I would keep that in mind when reading the paper. However, I don’t think I can fault his methods (I’m not an economist) and the conclusion seems reasonable given my earlier analysis.

It’s more evidence that when you see politicians ramp up the rhetoric about making corporations “pay their fair share of taxes”, as they undoubtedly will during the election season, remember that you may well be the one that pays in the end.