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Up or Down? Capital Income Taxation in the United States and the United Kingdom

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  • Vito Polito

Abstract

Empirical evidence suggests that the Effective Marginal Tax Rate (EMTR) on income from capital has increased considerably in both the United States and the United Kingdom during 1982---2005. The corporate tax literature predicts however that the EMTR should fall over time due to increasing international capital mobility and higher tax competition between governments. This paper argues that this inconsistency can be explained by the fact that EMTRs are currently computed from versions of the neoclassical investment model that omit deferred tax constraints faced by firms investing in both the United States and the United Kingdom.

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  • Vito Polito, 2012. "Up or Down? Capital Income Taxation in the United States and the United Kingdom," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 68(1), pages 48-82, March.
    • Handle: RePEc:mhr:finarc:urn:sici:0015-2218(201203)68:1_48:uodcit_2.0.tx_2-a
    DOI: 10.1628/001522108X632014
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    2. Cristian Carini & Michele Moretto & Paolo M. Panteghini & Sergio Vergalli, 2020. "Deferred taxation under default risk," Journal of Economics, Springer, vol. 129(1), pages 33-48, January.

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    More about this item

    Keywords

    capital income taxation; dividend policy; effective marginal tax rates; deferred taxes;
    All these keywords.

    JEL classification:

    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents

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