Liberals persist in believing that taxes on business are progressive — that they relieve the tax burden of the average working family and place it on corporations.
And conservatives tell us loudly and repeatedly that corporate taxes and higher income taxes — particularly for business owners and investors — hamper business growth.
But in fact, businesses have much greater ability than the average taxpayer to shift tax impact so the real burden falls disproportionately on lower-income households. That may not be the intent of the companies or the tax system — but it is the effect.
The state's 2009 Tax Incidence Study estimates that the effective rate for all Minnesota business taxes paid by the state’s top earning households was just one-third the rate of the lowest earning households – 1.1 percent of income for households at $124,000 or more but 3.3 percent of income for households earning between $10,000 and $16,000.
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