Before the 2017 Tax Cuts and Jobs Act (TCJA), it had been 30 years since any major tax cuts and revisions took place in the U.S. tax code. While most other countries had slashed their rates in those three decades, America was known for having the highest corporate tax rate among industrialized nations. We were losing our competitive edge. Lowering the top statutory corporate tax rate from 35 percent to 21 percent through the TCJA constituted the largest corporate tax cut in U.S. history.
Now a second Trump administration is considering another cut. This time, it would drop from 21 to 15 percent. Keeping corporate rates low is not just good economic policy, but consumers and workers benefit as well.
Businesses can’t just merely absorb extra expenses, and consumers often end up bearing the brunt of them. In the case of corporate taxes, they foot a hefty portion of the bill.
One study found that consumers pay up to 52 percent of the corporate tax burden; another study estimated 64 percent. In 2020 researchers calculated that for every one percentage increase in the corporate tax rate, retail prices increased by 0.17 percent.
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Kristen Walker is a policy analyst for the American Consumer Institute, a nonprofit education and research organization. For more information about the Institute, follow us on X @ConsumerPal.