Abstract

http://ssrn.com/abstract=328694
 
 

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The Impact and Inefficiency of the Corporate Income Tax: Evidence from State Organizational Form Data


Austan Goolsbee


University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER)

September 2002

NBER Working Paper No. w9141

Abstract:     
By double taxing the income of corporate firms but not unincorporated firms, taxes can play an important role in a firm's choice of organizational form. The sensitivity of the organizational form decision to tax rates can also be used to approximate the efficiency cost of the corporate income tax. This paper uses new cross-sectional data on organizational form across states compiled in the Census of Retail Trade to estimate this sensitivity. The results document a significant impact of the relative taxation of corporate to personal income on the share of economic activity that is done by corporations including sales, employment, and the number of firms. The impacts are substantially larger than those found in the previous empirical literature based on time-series data.

Number of Pages in PDF File: 27

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Date posted: September 6, 2002  

Suggested Citation

Goolsbee, Austan, The Impact and Inefficiency of the Corporate Income Tax: Evidence from State Organizational Form Data (September 2002). NBER Working Paper No. w9141. Available at SSRN: http://ssrn.com/abstract=328694

Contact Information

Austan Goolsbee (Contact Author)
University of Chicago - Booth School of Business ( email )
5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
773-702-5869 (Phone)
773-702-0458 (Fax)
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
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