Podcast with the Wall Street Journal’s Stephen Moore

September 12, 2006

We’ve released the sixth episode of our “Tax Policy Podcast” this morning, featuring an interview with the always-provocative Stephen Moore of the Wall Street Journal‘s editorial board.

Here’s a clip from the transcript, on the impact of corporate income taxes on the wages of U.S. workers:

Scott A. Hodge: I understand that in preparing for one of your recent columns you’ve been looking into study by Kevin Hassett, who’s an economist at the American Enterprise Institute, on how the wages of workers are affected by corporate tax rates across countries. I think most lay people tend to think that companies, and especially wealthy companies pay corporate income taxes. But there’s a growing understanding that real people also pay those corporate taxes. What did you find from Hassett’s study and what lessons can we take from that?

Stephen Moore: Well, I think Kevin Hassett’s study at the American Enterprise Institute is really quite groundbreaking because what it’s essentially arguing is that the real burden of the corporate income tax is not born by corporations or even the “rich fat cat investors,” but rather the workers who work for those companies. And what Kevin’s study shows is that wages rise much more slowly, and even fall, in countries that have high corporate taxes versus countries that have low corporate taxes. And this has been an age old question, as you know Scott, in the public finance literature about who really bears the burden of the corporate income tax. And what Kevin’s study shows is that workers are the ones who are paying a lot of the freight. And what that means to me is, if we want to see fundamental reform of our tax system, a big first start toward that would be to abolish the corporate income tax. One way of convincing the political system that that’s the right thing to do is to persuade organized labor and workers that they’re the ones who are really being harmed by our high corporate income tax.

Listen to the full interview here. You can find the Hassett study discussed in the interview, “Taxes and Wages,” here.

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