Taxes, Organizational Form, and the Deadweight Loss of the Corporate Income Tax

16 Pages Posted: 30 Jun 2000 Last revised: 18 Apr 2008

See all articles by Austan Goolsbee

Austan Goolsbee

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

Date Written: September 1997

Abstract

By changing the relative gain to incorporation, corporate taxation can play an important role in a firm's choice of organizational form. General equilibrium models have shown that substantial shifting of organizational form in response to tax rates implies a large deadweight loss of taxation. This paper estimates the impact of taxes on organizational form using data from 1900-1939. The results indicate that the effect of taxes is significant but small. A corporate rate increase of .10 raises the non-corporate share of capital .002-.03. The implied deadweight loss of the corporate income tax is around 5-10% of revenue.

Suggested Citation

Goolsbee, Austan, Taxes, Organizational Form, and the Deadweight Loss of the Corporate Income Tax (September 1997). NBER Working Paper No. w6173. Available at SSRN: https://ssrn.com/abstract=225931

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

Register to save articles to
your library

Register

Paper statistics

Downloads
52
rank
373,132
Abstract Views
1,604
PlumX Metrics