Is It Time to Eliminate Federal Corporate Income Taxes?

Levy Economics Institute, Working Papers Series 2020

30 Pages Posted: 23 Nov 2020

See all articles by Edward Lane

Edward Lane

Department of Finance, University at Albany

L. Randall Wray

University of Missouri at Kansas City; Bard College - The Levy Economics Institute

Date Written: November 20, 2020

Abstract

As the nation is experiencing the need for ever-increasing government expenditures to address COVID-19 disruptions, rebuild the nation’s infrastructure, and many other worthy causes, conventional thinking calls for restoring at least a portion corporate taxes eliminated by the 2017 Tax Cuts and Jobs Act, especially from progressive circles. In this working paper, Edward Lane and L. Randall Wray examine who really pays the corporate income tax and argue that it does not serve the purposes most people believe.

The authors provide an overview of the true purposes and incidence of corporate taxation and argue that it is inefficient and largely borne by consumers and employees, not shareholders. While the authors would prefer the elimination of the corporate profits tax, they understand the conventional thinking that taxes are necessary to help finance government expenditures—even if they disagree. Accordingly, the authors present alternatives to the corporate tax that shift the burden from consumers and employees to those who benefit the most from corporate success.

Keywords: Corporate Taxes, Tax Incidence, Modern Money Theory (MMT), Richard and Peggy Musgrave, Beardsley Ruml, Tax Reform

JEL Classification: B52, E12, E6, E62, G30, H20, H25

Suggested Citation

LANE, EDWARD and Wray, L. Randall, Is It Time to Eliminate Federal Corporate Income Taxes? (November 20, 2020). Levy Economics Institute, Working Papers Series 2020, Available at SSRN: https://ssrn.com/abstract=3734445 or http://dx.doi.org/10.2139/ssrn.3734445

EDWARD LANE (Contact Author)

Department of Finance, University at Albany ( email )

1400 Washington Ave
Albany, NY 12222
United States
9175750299 (Phone)
01262 (Fax)

HOME PAGE: http://www.LaneAssetManagement.com

L. Randall Wray

University of Missouri at Kansas City ( email )

5100 Rockhill Road
Kansas City, MO 64110-2499
United States

Bard College - The Levy Economics Institute

Blithewood
Annandale-on-Hudson, NY 12504-5000
United States

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