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The Incidence and Efficiency Costs of Corporate Taxation When Corporate and Noncorporate Firms Produce the Same Goods
Author:
International Monetary Fund
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Series:
IMF Working Papers
Volume/Issue:
Volume 1988: Issue 032
Language:
English
Publication Date:
01 Jan 1988
DOI:
https://doi.org/10.5089/9781451979541.001
ISBN:
9781451979541
ISSN:
1018-5941
Pages:
49
Keywords:
WP; tax burden; tax rate; income tax; substitution elasticity; Noncorporate firm; capital share; incidence formula; Corporate income tax; Macroprudential policy instruments; Self-employment; Demand elasticity; Tax incidence
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IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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One difficulty confronting Harberger’s celebrated model of the corporate income tax is how to treat the noncorporate production in primarily corporate sectors and corporate production in primarily noncorporate sectors. This paper presents a two-good model with corporate and noncorporate production of both goods. The incidence of the corporate tax in our Mutual Production Model (MPM) can differ markedly from that in the Harberger Model. The difference between the two models in deadweight loss is also striking, with losses in the MPM over ten times as large as in the Harberger Model.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund