|
|
"A comprehensive, collaborative elections resource."
|
CBO: International Burdens of the Corporate Income Tax
|
|---|
| Parent(s) |
Issue
|
| Contributor | CBlock941 |
| Last Edited | CBlock941 Aug 25, 2006 12:26pm |
| Logged |
2
[Older]
|
| Category | Study |
| News Date | Friday, August 25, 2006 06:00:00 PM UTC0:0 |
| Description | The analysis shows how the domestic owners of capital can escape most of the corporate income
tax burden when capital is reallocated abroad in response to the tax. But, as in Bradford (1978),
capital owners worldwide cannot escape the tax. Reallocation of capital abroad drives down the
personal return to investment so that capital owners worldwide bear approximately the full
burden of the domestic corporate income tax. Foreign workers benefit because an increased
foreign stock of capital raises their productivity and their wages. Domestic workers lose because
their productivity falls and they cannot emigrate to take advantage of higher foreign wages.
Under basic assumptions of the numerical application, the outcome is also similar to the
implications of the simpler model of Bradford in that the full worldwide burden falls on domestic
owners of productive inputs. That outcome changes, however, under alternative assumptions.
Burdens are measured in a numerical example by substituting factor shares and output shares
that are reasonable for the U.S. economy. Given those values, domestic labor bears slightly
more than 70 percent of the burden of the corporate income tax. The domestic owners of capital
bear slightly more than 30 percent of the burden. Domestic landowners receive a small benefit.
At the same time, the foreign owners of capital bear slightly more than 70 percent of the burden,
but their burden is exactly offset by the benefits received by foreign workers and landowners.
To the extent that capital is less mobile internationally, domestic labor’s burden would be lower
and domestic capital’s burden would be higher. Burdens can also be affected by the domestic
country’s ability to influence the world prices of some traded corporate outputs. But the signs
and magnitudes of those effects on burden depend upon the relative capital intensities of
production in the corporate sectors that produce internationally tradable goods. |
| Share |
|
|
2¢
|
|
| Article | Read Full Article |
|
| Date |
Category |
Headline |
Article |
Contributor |
|
|
