The Incidence and Efficiency Costs of Corporate Taxation When Corporate and Noncorporate Firms Produce the Same Good

40 Pages Posted: 15 Feb 2006

See all articles by Jane Gravelle

Jane Gravelle

Government of the United States of America - Congressional Research Service

Laurence J. Kotlikoff

Boston University - Department of Economics; National Bureau of Economic Research (NBER); Gaidar Institute for Economic Policy

Multiple version iconThere are 2 versions of this paper

Date Written: April 13, 1988

Abstract

One difficulty confronting Harberger`s celebrated model of the corporate income tax is how to treat the noncorporate production in primarily corporate sectors and corporate production in primarily noncorporate sectors. This paper presents a two-good model with corporate and noncorporate production of both goods. The incidence of the corporate tax in our Mutual Production Model (MPM) can differ markedly from that in the Harberger Model. The difference between the two models in deadweight loss is also striking, with losses in the MPM over ten times as large as in the Harberger Model.

JEL Classification: 3200

Suggested Citation

Gravelle, Jane and Kotlikoff, Laurence J., The Incidence and Efficiency Costs of Corporate Taxation When Corporate and Noncorporate Firms Produce the Same Good (April 13, 1988). IMF Working Paper No. 88/32, Available at SSRN: https://ssrn.com/abstract=884711

Jane Gravelle (Contact Author)

Government of the United States of America - Congressional Research Service ( email )

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Laurence J. Kotlikoff

Boston University - Department of Economics ( email )

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National Bureau of Economic Research (NBER)

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Gaidar Institute for Economic Policy

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