"A corporation may write its check to the Internal Revenue Service for payment of the corporate income tax, but that money must come from somewhere: from reduced returns to investors in the company, lower wages to its workers, or higher prices that consumers pay for the products the company produces." [CBO report "THE INCIDENCE OF THE CORPORATE INCOME TAX"]
This report goes on to say:
Although economists are far from a consensus about exactly
who bears how much of the burden of the corporate income tax, the existing studies
highlight the significant types of economic mechanisms as well as the empirical
estimates necessary for further quantifying the burdens. CBO's review of the studies
yields the following conclusions:
o The short-term burden of the corporate tax probably falls on
stockholders or investors in general, but may fall on some more than
on others, because not all investments are taxed at the same rate.
o The long-term burden of corporate or dividend taxation is unlikely to
rest fully on corporate equity, because it will remain there only if
marginal investment is not affected by those taxes. Most economists
believe that the corporate tax system has some effect on investment
o Most evidence from closed-economy, general-equilibrium models
suggests that given reasonable parameters, the long-term incidence of
the corporate tax falls on capital in general.
o In the context of international capital mobility, the burden of the
corporate tax may be shifted onto immobile factors (such as labor or
land), but only to the degree that the capital and outputs of different
countries can be substituted.
o In the very long term, the burden is likely to be shifted in part to
labor, if the corporate tax dampens capital accumulation.
o Most attempts to distribute the burden of corporate taxation have
neglected the possible importance of effects on the relative prices of