The Story of the Separate Corporate Income Tax: A Vehicle for Regulating Corporate Managers
Reuven S. Avi-Yonah
University of Michigan Law School
BUSINESS TAX STORIES, Foundation Press, 2005
This chapter examines the origins of the current corporate tax in the Corporate Excise Tax Act of 1909. It argues that unlike the 1894 version of the corporate tax, which was aimed primarily at taxing wealthy shareholders, the 1909 tax had a regulatory aim: It was intended to regulate and potentially limit the power of the great trusts, following the great merger and acquisition wave of 1890-1906. This regulatory function of the tax was achieved through both its publicity features (corporate tax returns were to be made public) and through the imposition of the tax itself, since proponents envisaged the possibility of differential taxation of desirable and undesirable forms of business enterprise.
This paper will be published as a chapter in a book entitled Business Tax Stories, to be published by Foundation Press later this year.
Date posted: March 23, 2005
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