Normative Corporate Income Tax with Rent for SDGs’ Funding: Case of the U.S

Mihoko Shimamoto ()
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Mihoko Shimamoto: Faculty of Social Sciences, Hosei University, Aihara-cho 4342, Machida-shi, Tokyo 194-0298, Japan

Sustainability, 2023, vol. 15, issue 4, 1-18

Abstract: The purpose of this study is to explain the justification for taxing corporate rents as a funding source for Sustainable Development Goals (SDGs), and to calculate a normative corporate tax rate that takes into account rents for corporations, especially multinational corporations, and to recommend that the current corporate tax surcharge be used to finance social common capital. Considering global tax avoidance, we propose that many countries cooperate to raise their corporate taxes and finance SDGs. Aiming to calculate a normative corporate tax rate with rents for each country, we applied the total factor productivity method for calculating the markup rate, assumed long-term interest rates to be the marginal efficiency of capital, and developed a normative corporate tax rate calculation method. Using a Cobb–Douglas function in dynamic pseudo-competitive profit optimal conditions, we calculated the rents of 234 American corporations listed on the S&P 500 index. The normative tax rates from 1982 to 2014 for these companies are stable at 40 to 55%, whereas corporate income tax has gradually decreased from 40% to less than 30%. Thus, the amount lost due to the race to the bottom of corporate taxes can be used to finance the SDGs.

Keywords: SDGs; social common capital; dynamic rent; normative corporate income tax; international taxation; U.S. companies (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2023
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