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The incidence of company tax in Australia


  • Xavier Rimmer

    (Treasury, Government of Australia)

  • Jazmine Smith

    (Treasury, Government of Australia)

  • Sebastian Wende

    (Treasury, Government of Australia)


This paper uses a computable general equilibrium framework to provide estimates of where the costs of company tax are borne and to test the importance of certain assumptions. The welfare benefits of a small fall in the company tax rate are shared between company owners and workers. The paper finds that in the long-run around one-third of the benefit accrues to the owners of capital in the main scenario, with the remaining two-thirds flowing to households, primarily through rises in real wages. Results with alternative assumptions are also presented.

Suggested Citation

  • Xavier Rimmer & Jazmine Smith & Sebastian Wende, 2014. "The incidence of company tax in Australia," Economic Roundup, The Treasury, Australian Government, issue 1, pages 33-47, April.
  • Handle: RePEc:tsy:journl:journl_tsy_er_2014_1_3

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    References listed on IDEAS

    1. Harberger, Arnold C., 2008. "The Incidence of the Corporation Income Tax Revisited," National Tax Journal, National Tax Association;National Tax Journal, vol. 61(2), pages 303-312, June.
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    Cited by:

    1. Chris Murphy, 2016. "The effects on consumer welfare of a corporate tax cut," Departmental Working Papers 2016-10, The Australian National University, Arndt-Corden Department of Economics.
    2. J.M. Dixon & J. Nassios, 2016. "Modelling the Impacts of a Cut to Company Tax in Australia," Centre of Policy Studies/IMPACT Centre Working Papers g-260, Victoria University, Centre of Policy Studies/IMPACT Centre.
    3. Michael Kouparitsas & Dinar Prihardini & Alexander Beames, 2016. "Analysis of the long term effects of a company tax cut," Treasury Working Papers 2016-02, The Treasury, Australian Government, revised May 2016.

    More about this item


    CGE; Computable General Equilibrium; company taxation; economic incidence; economic rents; capital mobility;

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies


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