Aggregate time series data are used to calculate the incidence of capital taxes. Part of the analysis is borrowed from the literature on sales tax incidence, comparing pre-tax interest rates with tax rates. The other part compares tax rates with after-tax interest rates, which are measured separately and independently from pre-tax interest rates. I find a positive correlation between capital tax rates and pre-tax interest rates, and little correlation between after-tax interest rates and tax rates, but both of these findings seem to derive in part from the effect of the business cycle on tax rate measures, as opposed to a shifting of capital taxes. The empirical findings are consistent with significant capital tax shifting in the long run, little shifting in the short run, and clearly rule out over-shifting.
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number
9374.
Length: Date of creation: Dec 2002 Date of revision: Handle: RePEc:nbr:nberwo:9374
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Find related papers by JEL classification: H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence E22 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Capital; Investment; Capacity
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