Is U.S. corporate income double-taxed?

Leonard Burman, Kimberly A. Clausing, Lydia Austin

Research output: Contribution to journalArticle

1 Citation (Scopus)

Abstract

Using data from several sources, we show that the vast majority of corporate income is not double-taxed in the United States. We estimate that the taxable share of U.S. corporate equity has declined dramatically in recent years, from over 80 percent in 1965 to about 30 percent at present. We discuss the causes of these dramatic changes in the taxable share of corporate stock. Several factors explain the shift, including changes in retirement finance, demographic changes, changes in the prevalence of pass-through business organizations, and the increased globalization of capital markets. These findings are important for the development of corporate tax policy. Moving the capital tax burden to the individual income tax, as some have proposed, without reforming tax preferences that currently exempt much corporate equity from taxation under the individual income tax, would lead to a large revenue loss. These findings also have implications for other important questions in public economics, including the measurement of the cost of capital, the importance of capital gains lock-in effects, the consequences of changes in dividend taxation, and the nature of clientele effects.

Original languageEnglish (US)
Pages (from-to)675-706
Number of pages32
JournalNational Tax Journal
Volume70
Issue number3
DOIs
StatePublished - Sep 1 2017
Externally publishedYes

Fingerprint

Income
Taxation
Equity
Income tax
Business organization
Tax
Cost of capital
Tax burden
Tax policy
Factors
Capital markets
Retirement
Clientele
Corporate tax
Dividends
Revenue
Capital gains
Lock-in effect
Finance
Pass-through

Keywords

  • Corporate taxation
  • Tax reform

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics

Cite this

Is U.S. corporate income double-taxed? / Burman, Leonard; Clausing, Kimberly A.; Austin, Lydia.

In: National Tax Journal, Vol. 70, No. 3, 01.09.2017, p. 675-706.

Research output: Contribution to journalArticle

Burman, Leonard ; Clausing, Kimberly A. ; Austin, Lydia. / Is U.S. corporate income double-taxed?. In: National Tax Journal. 2017 ; Vol. 70, No. 3. pp. 675-706.
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