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Capital Tax Incidence: First Impressions from the Time Series

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  • Casey B. Mulligan

Abstract

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.

Suggested Citation

  • Casey B. Mulligan, 2002. "Capital Tax Incidence: First Impressions from the Time Series," NBER Working Papers 9374, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:9374
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    Cited by:

    1. Casey B. Mulligan, 2002. "Capital, Interest, and Aggregate Intertemporal Substitution," NBER Working Papers 9373, National Bureau of Economic Research, Inc.
    2. Roberto Motto & Massimo Rostagno & Lawrence J. Christiano, 2010. "Financial Factors in Economic Fluctuations," 2010 Meeting Papers 141, Society for Economic Dynamics.
    3. Reuven Avi-Yonah, 2005. "The Pitfalls of International Integration: A Comment on the Bush Proposal and its Aftermath," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 12(1), pages 87-95, January.
    4. Casey B. Mulligan, 2003. "Capital Tax Incidence: Fisherian Impressions from the Time Series," NBER Working Papers 9916, National Bureau of Economic Research, Inc.
    5. Reuven Avi-Yonah, "undated". "The Pitfalls of International Integration: A Comment on the Bush Proposal and Its Aftermath," University of Michigan John M. Olin Center for Law & Economics Working Paper Series umichlwps-1007, University of Michigan John M. Olin Center for Law & Economics.

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    More about this item

    JEL classification:

    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity

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