Working Paper: NBER ID: w1073
Authors: Mervyn A. King; Don Fullerton
Abstract: This working paper presents Chapter 7 of a book to be published for the National Bureau of Economic Research by the University of Chicago Press. The point of the book is to compare taxes on income from capital in four countries,accounting for corporate, personal, and property taxes, and including national,regional, and local level taxes. We describe statutory tax rates and other tax rules in each country and calculate overall effective marginal tax ratesfor different combinations of asset, industry, source of finance, and ownership categories.This chapter compares effective tax rates in the four countries for different assets, industries, sources of finance, and ownership categories.Differences in overall effective tax rates among countries are attributed to differences in rates of inflation, actual depreciation,tax parameters, or differences in the amount of capital in each combination.For each country,we plot the effect of inflation on overall tax rates, and we plot the distribution of different effective tax rates at a given rate of inflation. We further investigate the sensitivity of results to assumptions about inflation and interest rates.
Keywords: taxation; income from capital; effective tax rates; comparative study
JEL Codes: H25; H32
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| inflation rates (E31) | effective tax rates (H29) |
| actual depreciation (D25) | effective tax rates (H29) |
| tax parameters (H20) | effective tax rates (H29) |
| capital composition (E22) | effective tax rates (H29) |
| inflation (E31) | effective marginal tax rate in West Germany (H21) |
| inflation (E31) | effective marginal tax rate in UK (H21) |
| tax treatment of debt-financed investments (H63) | effective tax rates (H29) |
| tax treatment of equity-financed investments (H24) | effective tax rates (H29) |
| UK tax rate on machinery (L64) | effective tax rate on machinery (H25) |
| Sweden tax rate on machinery (L64) | effective tax rate on machinery (H25) |