Download This PaperThe Incidence and Efficiency Costs of Corporate Taxation When Corporate and Noncorporate Firms Produce the Same Good
40 Pages Posted: 15 Feb 2006
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The Incidence and Efficiency Costs of Corporate Taxation When Corporate and Noncorporate Firms Produce the Same Good
The Incidence and Efficiency Costs of Corporate Taxation When Corporate and Noncorporate Firms Produce the Same Good
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: Suggested Citation
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