In advocating for a corporate tax cut, Treasury Secretary Steven Mnuchin overstates the consensus when he says “most economists believe that over 70 percent of corporate taxes are paid for by the workers.”

In fact, who bears the brunt of corporate taxes — investors or labor — is a matter of vigorous debate among economists who have studied it.

Three nonpartisan organizations — the Joint Committee on Taxation, the Congressional Budget Office and Tax Policy Center — all say the majority of the corporate tax burden falls on shareholders, not workers. The Treasury Department, which Mnuchin now heads, reached that same conclusion in 2008 during the George W. Bush administration.

To be sure, there are many economists who do share Mnuchin’s view. But to describe them as “most economists” is an exaggeration.

President Donald Trump has promised to overhaul the nation’s tax laws — including slashing the corporate tax rate. Details of his tax proposal have been sparse, but a one-page summary released in April called for reducing the statutory corporate tax rate to 15 percent from current rate of 35 percent. The U.S. has the highest statutory corporate tax rate among developed countries, but the effective corporate tax rate is about average when tax credits are factored in.

The question about who shoulders the bulk of the burden of corporate taxes is likely to shape up as a key issue in the congressional tax debate. Trump has repeatedly insisted his tax plan would focus cuts on the “middle class” and cutting corporate taxes is a key component of his vow to increase median family income.

On “Fox News Sunday,” host Chris Wallace asked Mnuchin about independent reports that have concluded shareholders carry the overwhelming majority of the burden of corporate taxes, and would therefore get most of the benefit from corporate tax cuts.

Wallace, Sept. 3: Independent experts, including your own Treasury Department, say that shareholders, people who own stock get — they are 75 percent to 85 percent of the burden from higher corporate tax rates and that if those corporate tax rates are lowered, that they will get 75 percent to 85 percent of the benefit, not the workers. Mnuchin: Chris, most economists believe that over 70 percent of corporate taxes are paid for by the workers. And the fact that the Treasury Department, I think it was eight or 10 years ago, put out a piece otherwise. I don’t believe in that. Our current economic team does not believe in that. There is lots of economic research.

Most economists now agree that workers carry at least some of the load of corporate taxes, and that to the extent lower corporate taxes might boost investment, workers would derive some benefit from those corporate tax cuts. But economists disagree strongly about the extent to which labor would benefit.

In 2008, the Office of Tax Analysis at the Treasury Department revisited its assumption that the corporate income tax was entirely borne by capital income. Using a new methodology, the OTA determined 76 percent of the corporate tax burden was borne by “normal or supernormal capital income” and 24 percent by labor. In 2012, the Treasury Department issued a “technical paper” explaining the use of a new and improved distributional model that reached a similar conclusion (adjusting the share borne by capital income to 82 percent).

Until 2010, the Congressional Budget Office (CBO) similarly assumed the entire burden of corporate taxes (or the benefits of corporate tax cuts) fell on the owners of capital. But in 2012, the CBO reevaluated the research on the topic and decided to allocate “75 percent of the federal corporate income tax to capital income and 25 percent to labor income.” (See Page 13.)

The following year, in response to “current economic research on the distribution of corporate income taxes,” the Joint Committee on Taxation performed its own analysis and concluded, “75 percent of corporate income taxes and 95 percent of the taxes attributable to pass-through business income [distributes] to owners of capital.” The committee reserved the right to update that conclusion, however, given that “some uncertainty remains regarding the division of the incidence between owners of domestic capital and labor.”

Independent non-governmental groups have similarly concluded that corporate taxes mostly affect shareholders. In 2012, the Tax Policy Center weighed in with its report, “How TPC Distributes the Corporate Income Tax.”

While it had previously assigned the entire corporate income tax burden “to being borne by the total returns to all capital,” the Tax Policy Center acknowledged “recent economic research” that “has improved our understanding of who bears the burden of the corporate income tax.”

“My paper cites the economic research in support of assigning most of the corporate income tax burden to shareholders and others who receive income from investment (such as interest),” James Nunns, author of the TPC paper, told us via email. “The Tax Policy Center assigns 80 percent of the corporate income tax burden to capital and only 20 percent to labor (workers’ wages and fringe benefits).”

Nonetheless, there are economists who have concluded— as Mnuchin has — that workers bear the brunt of corporate taxes, and would reap most of the rewards of a corporate tax cut.

Economists who back Mnuchin

The Treasury Department press office pointed us toward three economic analyses:

In a 2006 working paper, William C. Randolph of the Congressional Budget Office concluded that “domestic labor bears slightly more than 70 percent of the burden of the corporate income tax.” Randolph says that’s in part because in a global economy, “[d]omestic workers lose because their productivity falls and they cannot emigrate to take advantage of higher foreign wages.” The paper notes that the analysis and conclusions “are those of the authors and should not be interpreted as those of the Congressional Budget Office.” As we mentioned, the official CBO position since 2012 has been that just 25 percent of corporate tax burden falls on labor.

A 2013 study published in the National Tax Journal, which concluded that, “labor bears a signiﬁcant portion of the burden of the corporate income tax.” The study states, “Over all industries, our estimates suggest that a $1.00 increase in corporate tax revenue decreases wages by approximately $0.60.”

An op-ed published in the Wall Street Journal by economists Kevin A. Hassett, and Aparna Mathur, both of the conservative American Enterprise Institute, in which they write that their empirical analysis of data on international tax rates and manufacturing wages in 72 countries “confirmed that the corporate tax is for the most part paid by workers.” They wrote: “If a higher corporate tax reduces the return to capital, then capital may move abroad. This outflow could reduce the productivity and compensation for domestic workers, who are relatively immobile. So just as a sales tax might have an impact on the final goods price, a higher corporate tax might have an impact on wages. If wages go down when corporate taxes go up, the worker is left holding the tax bag.”

A Congressional Research Service report issued in December 2012, and written by Jane G. Gravelle and Thomas L. Hungerford, concluded that “new arguments” about most of the burden of the corporate tax falling on labor — such as those cited above — “rely on questionable methods” and “are not supported by empirical data.”

In a subsequent report published in 2014, the CRS states that while “a number of more recent theoretical studies find that labor can bear the majority of the [corporate] tax burden” those studies “appear to rely critically on particular assumptions that drive the results. When these assumptions are relaxed the burden of the corporate tax is found to fall mostly on capital — in line with the traditional analysis.”

CRS, Dec. 1, 2014: Given the unreliability of recent empirical research, and the consistency of traditional theoretical models, some economists have been reluctant to move away from traditional incidence assumptions, where owners of capital are assumed to bear most of the burden of the corporate tax.

Kimberly Clausing — an economics professor at Reed College and author of the paper “Who Pays the Corporate Tax in a Global Economy?” — dismissed research suggesting most of the corporate tax burden is tied to labor as mostly theoretical, unable to be replicated, “flawed” and “implausible.”

“Research shows that corporate tax cuts are far more likely to end up in the hands of those at the top of the income distribution,” Clausing told us in an email.

“If burgeoning corporate after-tax profits were the key to investment and wage growth, then the previous 15 years should have been a paradise of wage growth, as after-tax profits in recent years have been about 50 percent higher than in decades prior (as a share of GDP), and higher than at any point in the past half-century,” Clausing said. “… [T]he rates that have been suggested — rates as low as 15 percent or 20 percent — would not deliver substantial economic benefits for the middle class and would instead result in huge revenue losses and a much lighter tax burden for those at the top of the income distribution.”

Alan Auerbach, a professor of economics and law at the University of California, Berkeley, told us that while “some or even many economists” agree with Mnuchin’s view that the bulk of the corporate tax burden falls on workers, “it’s not accurate to say that most believe this.”

Auerbach, Sept. 5: This is a question on which there are considerable differences among economists who have studied the question. The CBO moved a few years ago from assuming that all corporate taxes fall on owners of capital to assuming that 25 percent falls on workers, and that does reflect a shift in the evidence toward some of the burden falling on labor, in part because of the increasing importance of globalization. There are some studies suggesting that labor bears as much as all of the burden. It would certainly be fair to say that some or even many economists believe that over 70 percent of corporate taxes fall on workers. But it’s not accurate to say that most believe this.

We have learned here at FactCheck.org that it is rarely possible to definitively settle arguments between competing economists. But we can say Mnuchin stretches the facts when he says “most economists” share his view.