High Corporate Tax Rate Kills Retiree Benefits : 401(K)s Hurt

Proposals to reduce the high corporate income tax is a great 'whipping boy' of the progressive socialist liberal democrats. The democrats scream and rent their clothing every chance they get to demonize corporations and how they are screwing the workers out of their share of the profits earned by sweat of the workers, not the corporation big wigs.

"It's not fair" is the lament of those standing in the picket line demanding more money but not more work. Democrats seize this opportunity to show the world how the rich fat cats are hording all that ready cash over seas instead of bringing it home and give much of it those that deserve it, the workers. That the workers signed on for a legitimate wage that they are getting now is of no concern, their leaders of the workers revolt believes they have the 'right' to those monies.

It's now the ugly 1%ers, , that are the problem even though they pay more then 30% of all the taxes and create most of the jobs. Also stock holders, retirees that are invested in 401(K)s and other types of worker and retiree benefits rely on dividends are being attacked by the high corporate taxes.

 The lower 50% pay less the 3% while many pay no tax at all. What? Who knew? Who cares. It's really only about taking what others have that excites the progressive democrat.

Stockholders Lose Dividends with High Corporate Tax Rates
Source: Dale Bandy, "The Harsh Realities of the Corporate Income Tax," American Thinker, November 28, 2014.

December 3, 2014

The corporate income tax may technically be a tax on business, but consumers, investors and workers are the ones who ultimately bear the tax burden. Dale Bandy, writing for the American Thinker, touches on some of the "hidden" consequences of the corporate income tax.

When a corporation is hit with higher taxes, it makes efforts to compensate for those lost dollars -- whether in raising its prices (hurting consumers) or docking wages or cutting back jobs (hurting workers). Moreover, the tax leads businesses to expand abroad and retain profits rather than paying higher dividends to shareholders. Bandy explains:

• The combined federal and state corporate tax rate in the United States is 39.1 percent, much higher than the average of other OECD nations, which is 25 percent.
• American corporations with foreign subsidiaries are not taxed on that foreign income unless it brings that income into the United States, so parent corporations are unwilling to distribute those earnings to the parent company's shareholders as dividends, as they will be taxed heavily on that income.
• Typically, American companies have paid dividends worth 4 to 5 percent of stock value. Over the last several years, however, dividends have been closer to 2 percent, as corporations have held back on dividend distribution and instead reinvested their earnings overseas.

Bandy urges Congress to reduce the corporate tax rate. The NCPA has modeled abolishing the corporate income tax entirely, a move that would increase investment, send wages rising 12 to 13 percent and increase GDP by 8 to 10 percent.