The Joint Committee on Taxation (JCT), Congress’s official score keeper on revenue bills, recently issued a new report that details how they are changing how they calculate the distribution of the burden of the corporate income tax among taxpayers. This is important because talk of corporate tax reform is in vogue. In deciding on changes to corporate taxes, Congress should have an idea who will pay higher taxes, who will pay lower taxes, and who will be unaffected.

The burden of the corporate income tax falls on somebody, and much research has been devoted to determining who that somebody is. The candidates are capital owners (that is, corporate shareholders), workers, and customers. Most tax analysts scratch customers from the list, leaving capital owners and labor. Until a few years ago, most tax analysts read the weight of economic evidence as suggesting that capital bore 100 percent of the corporate tax burden.

During the George W. Bush administration, some tax analysts began producing analyses that attributed 60, 90, 100, and even 400 percent of the burden of the corporate income tax to labor. Subsequent studies, however, called much of this research into question and confirmed the earlier near-consensus that the burden of the corporate income tax is indeed overwhelmingly borne by capital. But the 2000s-era research did have some influence—government agencies that deal with tax policy (the Department of Treasury, the Congressional Budget Office, and JCT) made modest changes to their methods of calculating the distribution of the burden of the corporate income. CBO now attributes 75 percent of the burden to capital and the rest to labor. Treasury settled on 82 percent of the burden on capital and 18 percent on labor. JCT has now concluded that 75 percent falls on capital and 25 percent on labor.

Attempts have been made to put this change into perspective, notably by Martin Sullivan in a Tax Notes article (subscription only) and Bruce Bartlett in a New York Times Economix blog post. Many people may have gotten an exaggerated sense of how much this change in incidence assumptions used by the JCT changes how the corporate income tax is distributed. It is admittedly a difficult question to examine the implications of this methodological change on taxpayers in various income categories, mostly because taxpayers may be in different income categories before and after the new methods are applied to the analysis. A taxpayer may be in one income category under the old method and in another under the new method. Comparing the tax burden under one method to the burden under another method provides no information on the main policy question of who gains and who loses from a tax law change.

But, this doesn’t mean we can’t get a good sense of how a corporate tax increase would be distributed over the population given JCT’s new method. Luckily, JCT includes information on a hypothetical increase in the corporate tax. I calculated the long-run average tax rate for taxpayers in various income categories of an approximately 3 percent increase in revenues generated by corporate income taxes ($10 billion per year).

This chart displays the average tax rate faced by households in each income category before and after the 3 percent corporate tax revenue increase under JCT’s new methodology. The first thing to notice is the overall effect on average tax rates is small. This is not unexpected, since the increase in taxes ($10 billion) is small in relation to total income ($11.7 trillion). Or to say it another way, the corporate income tax really doesn’t raise a lot of money any more. Second, taxpayers with income below $75,000 (about 70 percent) are barely affected by this tax increase—their average tax rate would increase by about 0.04 percentage points or almost $12. Overall, these low- and middle-income taxpayers would bear about 15 percent of the tax increase. Even millionaires see their average tax rate increase by less than 0.2 percentage points in this scenario. Meanwhile, the richest 5 percent of taxpayers would bear over half of the tax increase.

So, the new methods of distributing the corporate tax burden used by government agencies produces essentially the same conclusions as before: corporate tax changes primarily affect the tax burden of those at the top of the income distribution—the taxpayers who own capital.

Citizens for Tax Justice produced an analysis of the JCT study that also shows that corporate tax changes mostly increases the taxes of high-income taxpayers and not lower-income taxpayers who are primarily wage earners.