Washington, D.C. – If proposals to raise the corporate tax rate to 28 percent are enacted next year, workers in Wisconsin would lose between $577 million and $1.3 billion in annual wages, according to a new analysis released today by the Alliance for Competitive Taxation (ACT) and the Tax Foundation.
Tax issues are front-and-center on the campaign trail and in Washington, D.C. as key provisions of the 2017 Tax Cuts and Jobs Act are expiring next year. To understand the state-by-state impact on workers of raising the corporate tax rate to 28 percent from its current 21 percent, ACT utilized government data and peer-reviewed academic research.
The report presents a range of outcomes based on widely accepted economic metrics. The lower estimate assumes a 25 percent pass-through rate to labor – indicating that for every $1 in new taxes, $0.25 is deducted from worker wages (the same estimate is used by the Congressional Budget Office) – while the upper estimate assumes a 60 percent pass-through rate (based on a recent published study by Rutgers University and International Monetary Fund economists).
“As this new analysis shows, raising taxes on Wisconsin businesses, large and small, will reduce workers’ paychecks, hurt the local economy, and give our global competitors a major advantage over the American companies and workers competing with them,” said Kevin Brady, spokesperson for Alliance for Competitive Taxation and former Chairman of the House Ways and Means Committee.
The findings for Wisconsin mirror the results at the national level, with workers across the United States cumulatively poised to lose between $33 billion and $81 billion a year in wages. In conjunction with the average state corporate income tax, an increase at the federal level to 28 percent would result in the second-highest corporate tax rate among the 38 advanced economies that comprise the Organization for Economic Cooperation and Development (OECD).
To access the full report and learn more about the analysis’ methodology, sourcing, and ranges see the full analysis here.
