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Corporate Income Tax Reform: The Neglected Issue of Tax Income

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Author Info
Ablett, John (University of Western Sydney)
Hart, Neil (University of Western Sydney)
Abstract

The 'double taxation' of corporate income is often used as an argument in support of the integration of company and shareholder taxes, as occurred with the introduction of tax imputation in 1987 in Australia. These arguments are based, often implicity, on the premise that the economic incidence of company taxes falls on shareholders receiving dividend income. However, a review of the available theoretical and empirical literature fails to provide an unambiguous answer to the corporate income tax incidence question. Empirical results presented in this paper suggest the existence of significant forward shifting of the tax in to consumers though higher prices in the case of Australian manufacturing corporations. A more informed discussion of tax reform must therefore consider more carefully the implications arising from the likely existence of significant forward shifting if the corporate income tax.

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Publisher Info
Article provided by Queensland University of Technology (QUT), School of Economics and Finance in its journal Economic Analysis and Policy (EAP).

Volume (Year): 35 (2005)
Issue (Month): 1-2 (March/September)
Pages: 45-60
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Handle: RePEc:eap:articl:v:35:y:2005:i:1-2:p:45-60

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Related research
Keywords: Incidence; Tax Incidence; Tax; Taxation; Taxes;

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Find related papers by JEL classification:
H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Shoven, John B & Whalley, John, 1973. "General Equilibrium with Taxes: A Computational Procedure and an Existence Proof," Review of Economic Studies, Blackwell Publishing, vol. 40(4), pages 475-89, October. [Downloadable!] (restricted)
  2. Bhatia, K.B., 1988. "Tax Incidence In A Hierarchical Model," UWO Department of Economics Working Papers 8801, University of Western Ontario, Department of Economics.
  3. Miyagiwa, Kaz, 1988. "Corporate income tax incidence in the presence of sector-specific unemployment," Journal of Public Economics, Elsevier, vol. 37(1), pages 103-112, October. [Downloadable!] (restricted)
  4. McLure, Charles Jr., 1975. "General equilibrium incidence analysis : The Harberger model after ten years," Journal of Public Economics, Elsevier, vol. 4(2), pages 125-161, February. [Downloadable!] (restricted)
  5. Beath, John A, 1979. "Target Profits, Cost Expectations and the Incidence of the Corporate Income Tax," Review of Economic Studies, Blackwell Publishing, vol. 46(3), pages 513-25, July. [Downloadable!] (restricted)
  6. Gravelle, Jane G & Kotlikoff, Laurence J, 1989. "The Incidence and Efficiency Costs of Corporate Taxation When Corporate and Noncorporate Firms Produce the Same Good," Journal of Political Economy, University of Chicago Press, vol. 97(4), pages 749-80, August. [Downloadable!] (restricted)
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  7. Piggott, John & Whalley, John, 1987. "Interpreting Net Fiscal Incidence Calculations," The Review of Economics and Statistics, MIT Press, vol. 69(4), pages 685-94, November. [Downloadable!] (restricted)
  8. Shoven, John B & Whalley, John, 1984. "Applied General-Equilibrium Models of Taxation and International Trade: An Introduction and Survey," Journal of Economic Literature, American Economic Association, vol. 22(3), pages 1007-51, September. [Downloadable!] (restricted)
  9. Bhatia, Kul B., 1988. "Tax incidence in a hierarchical model," Journal of Public Economics, Elsevier, vol. 37(2), pages 221-242, November. [Downloadable!] (restricted)
  10. Don Fullerton & Gilbert E. Metcalf, 2002. "Tax Incidence," NBER Working Papers 8829, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  11. Kevin Daly & Neil Hart, 1994. "Mark-up Pricing and the Forward Shifting of the Corporate Income Tax," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 27(3), pages 45-54. [Downloadable!] (restricted)
  12. Arnold C. Harberger, 1962. "The Incidence of the Corporation Income Tax," Journal of Political Economy, University of Chicago Press, vol. 70, pages 215. [Downloadable!] (restricted)
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This page was last updated on 2009-11-22.

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