Tax Foundation and Ernst & Young Effects of Tax Policy on Corporate Financing Decisions : Integration of the Corporate and Personal Income Tax

As the size of government continues to grow, so too does the need for reliabl e information about its cost and scope. Since 1937, the Tax Foundation has been monitoring tax and fiscal activities at all levels of government : federal, state and local. In that year, civic-minded businessmen envisioned an independent group of researchers who , by gathering data and publishing information on the public sector in an objective , unbiased fashion, could counsel government, industry and the citizenry on publi c finance. More than 50 years later, in a radically different public arena, the Foundatio n continues to fulfill the mission set out by its founders .Through newspapers, radio , television, and mass distribution of its own publications, the Foundation supplie s objective fiscal information and analysis to policymakers, business leaders, and th e general public. The Tax Foundation's research record has made it an oft-quoted source in Washing-ton and state capitals, not as the voice of left or right, not as the voice of an industry o r even of business in general, but as an advocate of a principled approach to tax policy , based on years of professional research. Today, farsighted individuals, businesses, and charitable foundations still understan d the need for sound information on fiscal policy .As a nonprofit, tax exempt 501(c)(3) organization, the Tax Foundation relies solely on their voluntary contributions for it s support. need to encourage quality tax policy research and to make this research available to a broad audience of tax policy makers and analysts in Washington, D .C ., and around the country. Professors are appointed to the Ernst & Young/Tax Foundation Visiting Professo r program for a year, during which time they are expected to publish research throug h the Tax Foundation and take part in Tax Foundation programs to the extent their schedules and opportunities permit. adopt an integrated tax system to eliminate double taxation of corporate profits. In December of that same year, the America n Institute of Certified Public Accountant s joined the Treasury in advocating the adoption of integration. In each case, one o f the goals of integration was to reduce th e economic distortion of the existing classical corporate and personal income tax systems in favor of debt financing over equity financing of corporate investment. A second bias that integration was intended to alleviate was the tax-incentive for corporations to retain earnings. …