Working Paper: NBER ID: w14494
Authors: Alan J. Auerbach; Michael P. Devereux; Helen Simpson
Abstract: Following Meade (1978), we reconsider issues in the design of taxes on corporate income. We outline developments in economies and in economic thought over the last thirty years, and investigate how these developments should affect the design of taxes on corporate income. We consider a number of tax systems which have been proposed, distinguishing them in two main dimensions: the definition of what is to be taxed, and where it is to be taxed. We suggest that a tax levied on economic rent accruing in the corporate sector, and on a destination basis, merits serious consideration. We discuss alternative approaches, including both R-based and R+F-based flow-of-funds taxes and an ACE allowance. It is the destination basis -- with border adjustments for exports and imports -- which primarily distinguishes our suggestions from those of Meade (1978).
Keywords: No keywords provided
JEL Codes: G32; H25
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| structure of corporate taxes (G32) | corporate decisions (G34) |
| corporate decisions (G34) | economic efficiency (D61) |
| tax system that taxes only economic rent (H29) | investment decisions (G11) |
| tax competition among countries (H26) | tax rates (H29) |
| tax competition among countries (H26) | overall tax revenues (H29) |
| asymmetrical treatment of debt and equity (G32) | corporate financial decisions (G39) |
| corporate financial decisions (G39) | choice between financing through debt or equity (G32) |