From Sword to Shield: The Transformation of the Corporate Income Tax, 1861 to Present
Steven A. Bank
University of California, Los Angeles (UCLA) - School of Law
April 19, 2010
Oxford University Press, 2010
UCLA School of Law, Law-Econ Research Paper No. 10-04
The U.S. corporate income tax – and in particular the double taxation of corporate income – has long been one of the most criticized and the most stubbornly persistent aspects of the federal revenue system. Unlike in most other industrialized countries, corporate income is taxed twice, first at the entity level and a second time at the shareholder level when distributed as a dividend. The conventional wisdom has been that double taxation was part of the system’s original design over a century ago and it has survived despite withering opposition from business interests. In both cases, history tells another tale. Double taxation as we know it today did not appear until several decades after the corporate income tax was first adopted. Moreover, it was embraced by corporate representatives at the outset and in subsequent years businesses have been far more ambivalent about its existence than is popularly assumed. This excerpt is the introduction from a book entitled From Sword to Shield: The Transformation of the Corporate Income Tax, 1861 to Present (Oxford University Press 2010). The book – the first historical account of the evolution of the corporate income tax in America – helps to explain its origins and the political, economic, and social forces that transformed it from a sword against evasion of the individual income tax to a shield against government and shareholder interference with the management of corporate funds.
Number of Pages in PDF File: 24
Keywords: history of corporate taxation, taxation of corporate income, federal revenue system
JEL Classification: H20, H25Accepted Paper Series
Date posted: April 20, 2010
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