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Is It Time to Eliminate Federal Corporate Income Taxes?

Author

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  • Edward Lane
  • L. Randall Wray

Abstract

As the nation is experiencing the need for ever-increasing government expenditures to address COVID-19 disruptions, rebuild the nation's infrastructure, and many other worthy causes, conventional thinking calls for restoring at least a portion corporate taxes eliminated by the 2017 Tax Cuts and Jobs Act, especially from progressive circles. In this working paper, Edward Lane and L. Randall Wray examine who really pays the corporate income tax and argue that it does not serve the purposes most people believe. The authors provide an overview of the true purposes and incidence of corporate taxation and argue that it is inefficient and largely borne by consumers and employees, not shareholders. While the authors would prefer the elimination of the corporate profits tax, they understand the conventional thinking that taxes are necessary to help finance government expenditures--even if they disagree. Accordingly, the authors present alternatives to the corporate tax that shift the burden from consumers and employees to those who benefit the most from corporate success.

Suggested Citation

  • Edward Lane & L. Randall Wray, 2020. "Is It Time to Eliminate Federal Corporate Income Taxes?," Economics Working Paper Archive wp_979, Levy Economics Institute.
    • Handle: RePEc:lev:wrkpap:wp_979
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    File URL: http://www.levyinstitute.org/pubs/wp_979.pdf
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    References listed on IDEAS

    as
    1. L. Randall Wray, 2015. "Modern Money Theory," Palgrave Macmillan Books, Palgrave Macmillan, edition 2, number 978-1-137-53992-2, September.
    2. Flavia Dantas & L. Randall Wray, 2017. "Full Employment: Are We There Yet?," Economics Public Policy Brief Archive ppb_142, Levy Economics Institute.
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    Cited by:

    1. Yeva Nersisyan & L. Randall Wray, 2021. "Can Biden Build Back Better? Yes, If He Abandons Fiscal "Pay Fors"," Economics Public Policy Brief Archive ppb_155, Levy Economics Institute.
    2. Edward Lane & L. Randall Wray, 2021. "Why President Biden Should Eliminate Corporate Taxes to Build Back Better," Economics Policy Note Archive 21-3, Levy Economics Institute.

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    More about this item

    Keywords

    Corporate Taxes; Tax Incidence; Modern Money Theory (MMT); Richard and Peggy Musgrave; Beardsley Ruml; Tax Reform;
    All these keywords.

    JEL classification:

    • B52 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Historical; Institutional; Evolutionary; Modern Monetary Theory;
    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies

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