Corporations, Society and the State: A Defense of the Corporate Tax

47 Pages Posted: 11 Mar 2004  

Reuven S. Avi-Yonah

University of Michigan Law School

Date Written: March 2004

Abstract

This article attempts to provide the first comprehensive rationale for defending the current corporate income tax. It argues that the usual reasons given for the tax (primarily as an indirect way of taxing shareholders, or alternatively as a form of benefit tax) are inadequate. It then explains what the original rationale to adopt this tax was in 1909, namely to regulate managerial power, and that this rationale stems from the "real" view of the corporation, which was the dominant view throughout the many transformations underwent by the corporate form from Roman times to the present. Turning to normative argument, the article then argues that the regulatory rationale given for taxing corporations in 1909 is still valid, since similar social conditions continue to exist, and in fact is strengthened by the rise of multinational enterprises. Finally, the article argues that this rationale is necessary from a normative perspective to support the fight against the two crucial current threats to the corporate tax posed by the corporate tax shelter and tax competition phenomena.

Suggested Citation

Avi-Yonah, Reuven S., Corporations, Society and the State: A Defense of the Corporate Tax (March 2004). U of Michigan Law, Public Law Research Paper No. 40; Michigan Law and Economics Research Paper No. 04-006. Available at SSRN: https://ssrn.com/abstract=516202 or http://dx.doi.org/10.2139/ssrn.516202

Reuven S. Avi-Yonah (Contact Author)

University of Michigan Law School ( email )

625 South State Street
Ann Arbor, MI 48109-1215
United States
734-647-4033 (Phone)

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