Walter Williams writes in Investor Business Daily Who Pays for Corporate Taxes 11/9/11.


The largest burden of corporate taxes is borne by workers. We discover that by asking a simple question, such as: Which workers on a road construction project earn the higher pay — those employed moving dirt with shovels and wheelbarrows or those doing the same atop giant earthmovers?

You’d guess the guys operating the earthmovers, but why? It’s not because they’re unionized or because construction contractors have a fondness for earthmover operators. It’s because those workers have more capital (tools) to work with and are thereby more productive. Higher productivity translates into higher wages.

HKO Comments:

We normally think higher taxes on business are passed onto just the consumers, but Williams points out that higher wages come from higher productivity and that comes from capital investment.

Man will quickly reach his physical mental limits without the enormous leverage given to the worker with modern capital investments.  Tax policies, social attitudes such as frivolous lawsuits, and onerous regulations which cripple capital investment will quickly limit the earning potential of the workers.

This point was also made by Steven Landsburg writing in the Wall Street Journal on 10/29/11, How the Death Tax Hurts the Poor (may require a paid subscription).  Landsburg noted that higher death taxes encouraged consumption rather than investment and that the reduced investment hurts the productivity and earning power of the worker.

At The American Standard Blog Jeffrey Anderson writes Americans’ Incomes Have Dropped 6.7 Percent During the ‘Recovery’.


Gordon Green, former chief of the Governments Division at the U.S. Census Bureau and co-author of the report (with fellow Census veteran John Coder), says, “Real income fell by 3.2 percent during [the recession].  And during the recovery it went down by 6.7 percent.” So “income [has] declined twice as much in the recovery as in the recession itself.”

This is why periods of growth and rising incomes for all may also be periods where inequality also grows.  Those who stress equality and fairness end up putting a greater emphasis on making the rich poorer than making the poor richer.  There has been a dramatic decline in the number of millionaires in the last few years.  Is anyone better off as a result?