The Corporate Income Tax in an Intertemporal Equilibrium Model with Imperfectly Mobile Capital

AbstractGovernments of EU Member States have been reducing statutory corporate income tax rates (“CIT”) for several years. What encourages them to take part in tax competition? The article discusses several issues which are in favor of lower CIT rates. They are selected based on their relevance. The study is performed with use of data available from applicable statistical bodies/literature and is based on literature review (especially in cases where required data is not available). It seems that the commonly raised issue of rivalry for capital in the globalizing world economy with highly mobile capital could be only one of a number of reasons for CIT rate depression. Tax competition is fueled by the various sizes of the economies of EU countries as well. The following important rationale may include the aspiration of governments to curb the local shadow economy. There are also some issues of a more theoretical nature that explain decreasing CIT rates. They include: (i) the necessity to accommodate CIT rate levels from the perspective of double taxation of dividends, (ii) the requirement to consider political responsibility of CI or (iii) the need to manage a deadweight loss. As a result of these challenges EU Member States often broaden the legal CIT base to maintain government revenues.

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Sector-Specific Unemployment and Corporate Income Tax Incidence: A Geometric Exposition

The American Economist ◽

10.1177/056943459303700108 ◽

1993 ◽

Vol 37 (1) ◽

pp. 64-67 ◽

Cited By ~ 2

Author(s):

Leonard F. S. Wang

Keyword(s):

Equilibrium Model ◽

Duality Theory ◽

Income Tax ◽

Capital Mobility ◽

National Income ◽

Corporate Income Tax ◽

Tax Incidence ◽

Corporate Sector ◽

Corporate Tax ◽

Simple Geometry

This paper examines the incidence of the corporate income tax using duality theory for a two-sector general equilibrium model in which the economy experiences sector-specific unemployment and perfect capital mobility with a sector-specific rigid-wage in the corporate sector. Utilizing the simple geometry without the complicated mathematical manipulations required in the previous works, we demonstrate that capital always bears more of the corporate tax burden than does labor, while unemployment and national income unambiguously decline.

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The investment activity of Russian business: Relationships with corporate income tax burden

International Accounting ◽

10.24891/ia.23.7.800 ◽

2020 ◽

Vol 23 (7) ◽

pp. 800-823

Author(s):

A.A. Razuvaeva ◽

N.V. Pokrovskaya

Keyword(s):

Income Tax ◽

Systems Approach ◽

Corporate Income Tax ◽

Federal State ◽

Tax Burden ◽

Return On Assets ◽

Investment Activity ◽

Analysis And Synthesis ◽

Tax Benefits

Subject. This article assesses the role of tax incentives for the Russian business' investment behavior. Objectives. The article aims to identify the relationship between the corporate income tax burden as an indicator responding to tax benefits application and the investment activities of Russian companies. Methods. For the study, we used the methods of analysis and synthesis, and the systems approach. The analysis covers the period from 2012 to 2018. The data of the Russian Federal State Statistics Service, Federal Tax Service of Russia, and the Ministry of Finance of the Russian Federation are the source of information for analysis. Results. The article summarizes the characteristics of the investment activity of the Russian business. However, the article does not reveal any obvious relationship between the income tax burden and the investment activity of the Russian business in the 2010s. There is also no link found between fixed investment and return on assets. Conclusions. The increase in income tax burden in the late 2010s, accompanied by a decrease in profitability, poses a threat to the active investment development of Russian organizations.

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