Capital Taxation During the U.S. Great Depression
39 Pages Posted: 13 Dec 2010 Last revised: 12 May 2023
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Capital Taxation During the U.S. Great Depression
Capital Taxation during the U.S. Great Depression
Date Written: December 2010
Abstract
Previous studies of the U.S. Great Depression find that increased taxation contributed little to either the dramatic downturn or the slow recovery. These studies include only one type of capital taxation: a business profits tax. The contribution is much greater when the analysis includes other types of capital taxes. A general equilibrium model extended to include taxes on dividends, property, capital stock, and excess and undistributed profits predicts patterns of output, investment, and hours worked more like those in the 1930s than found in earlier studies. The greatest effects come from the increased tax on corporate dividends.
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