Tax Incidence and Scientific Inquiry

7:2 J. Phil. Int'l Law 26 (2017)

23 Pages Posted: 21 Feb 2017

Date Written: February 19, 2017


The ‘small open economy’ model is typically given as the analytic framework for corporate tax incidence. Economists have applied the framework to justify tax policies premised on relatively high rates of labor taxation in both the United States and Europe. However, the ‘small open economy’ model is extremely controversial and has been challenged on various grounds. Here, the additional criticism is developed that the ‘small open economy’ model is not based on scientific methods of inquiry. An alternative theory is proposed referred to as the ‘small person economy’ model, where ‘small persons’ are presumed to pay labor taxes out of current earnings thereby reducing economic welfare directly. This also entails a ‘pass-through’ incidence effect via reduced consumer spending in the macroeconomy causing an efficiency loss. The reformulated ‘small person economy’ has significant implications for tax policy design.

Suggested Citation

Bogenschneider, Bret, Tax Incidence and Scientific Inquiry (February 19, 2017). 7:2 J. Phil. Int'l Law 26 (2017). Available at SSRN:

Bret Bogenschneider (Contact Author)

University of Surrey - School of Law ( email )

United Kingdom

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