Study.pdf

2006-09.pdf
Preview of study
🔗 Source: cbo.gov
📊 Size: 164 KB
👤 Author: Congressional Budget Office
⬇️ Downloads: 73

Summary

The study examines the long-run incidence of a corporate income tax in an open economy using a two-country, five-sector general equilibrium model. The model assumes perfect international mobility of capital and fixed worldwide stock of capital and labor supply in each country. The analysis shows that domestic owners of capital can escape most of the corporate income tax burden by reallocating capital abroad, but capital owners worldwide bear the full burden of the tax. Foreign workers benefit from increased foreign capital, while domestic workers lose due to decreased productivity and wages. The study finds that under basic assumptions, domestic labor bears slightly more than 70% of the burden, while domestic owners of capital bear slightly more than 30%. The burden can be affected by the mobility of capital and the domestic country's ability to influence world prices of traded corporate outputs.

Description

The study examines the long-run incidence of a corporate income tax in an open economy using a two-country, five-sector general equilibrium model.

Technical Information

  • File Format: PDF
  • File Size: 164 KB
  • Pages: 69
  • Language: EN
  • Author: Congressional Budget Office
  • Total Downloads: 73
  • Last Updated: 8 hours ago

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