The Incidence of the Corporate Income Tax is Irrelevant for its (Benefit-Based) Justification / Simon M. Naitram, Matthew C. Weinzierl.

Format:

Book

Author/Creator:

Naitram, Simon M.

Contributor:

National Bureau of Economic Research.

Weinzierl, Matthew C.

Series:

Working Paper Series (National Bureau of Economic Research) no. w29547.

NBER working paper series no. w29547

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Incidence of the Corporate Income Tax is Irrelevant for its

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2021.

Summary:

Robust support for corporate income taxation is a puzzle for standard tax theory because the tax's incidence is uncertain and unreliable. We propose a resolution: if the corporate tax is seen as a benefit-based tax, its normative appeal depends on the correspondence between its incidence and that of the benefit which corporations derive from the state's activities. We show that a simple mechanism makes this correspondence exact--and the net incidence of the tax zero--when the tax base matches what we call the benefit base. As a result, the appeal of the corporate income tax is independent of incidence as conventionally understood.

Notes:

Print version record

December 2021.