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Effective Tax Rates on Different Corporate Investments

Author

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  • John Freebairn

    (Department of Economics, The University of Melbourne)

Abstract

An effective tax rate is measured by the difference between the pre-tax return earned by the company investor and the after-tax return received by the saver providing the funds. The personal income and foreign withholding taxes as well as the corporate income tax are considered. Under current taxation in Australia, effective tax rates vary between debt and equity, resident and nonresident savers, distributed and retained earnings, and across companies of different sizes. Corporate income tax reforms, including changes to the tax base and the tax rate, change the patterns of, as well as the magnitudes of, effective tax rates. By way of illustration, effects of a lower corporate tax rate and of accelerated depreciation on the pattern and magnitudes of effective tax rates are assessed.

Suggested Citation

  • John Freebairn, 2018. "Effective Tax Rates on Different Corporate Investments," Department of Economics - Working Papers Series 2039, The University of Melbourne.
    • Handle: RePEc:mlb:wpaper:2039
    as

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    File URL: https://fbe.unimelb.edu.au/__data/assets/pdf_file/0007/2793283/2039_John-Freebairn_MEF-Revised18.pdf
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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