A Political Theory of Corporate Taxation

A Political Theory of Corporate Taxation

Corporate Income Taxation

We have stressed that tax incidence must be traced to people, since corporations cannot bear the burden of a tax. Why then tax corporations at all? There are several possible justi…cations. First, there are valuable bene…ts, such as limited liability, to incorporation. The corporate tax could be seen as simply a tax on that value. However, the current corporate tax system does not re‡ect a sens...

Chapter 24 Corporate Taxation

“These companies have an obligation to the United States of American to pay their taxes.” Representative Rosa DeLauro, in response to a $10 billion contract to Accenture LLP, which is based in Bermuda in order to avoid paying U.S. corporate income taxes. These sorts of strong feelings arise, in part, because the role of corporate taxation has changed over time. Corporations are taxed on net ear...

Corporate Governance and Taxation

This paper analyzes the interaction between corporate taxes and corporate governance. We show that the characteristics of a taxation system impact the size of private benefits managers are able to extract. A higher tax rate increases the amount of income a manager would divert, while stronger tax enforcement reduces it and, in so doing, can raise the stock market value of a company in spite of ...

Political economy of Ramsey taxation

We study the dynamic taxation of capital and labor in the neoclassical growth model under the assumption that taxes and public good provision are decided by a self-interested politician who cannot commit to policies. Citizens can imperfectly control the politician using elections similar to a political agency model. As in the standard dynamic taxation models, we only allow for linear taxes on c...