The Corporate Tax: Where Has It Been and Where Is It Going?*

Jane Gravelle

National Tax Journal, 2004, vol. 57, issue 4, 903-23

Abstract: Over the past 50 years, corporate tax revenues fell from 5.6 to 1.2 percent of output. The effective tax burden on new corporate sector investment fell from 70 to 32 percent. These changes arise from rate reductions, liberalized depreciation, growth of Subchapter S corporations, and growth in corporate tax shelters. The fall in rates enhanced efficiency, eliminating 90 percent of the deadweight loss from sectoral distortions. More recent changes had small effects. The current corporate tax proposal could increase distortions and hamper tax administration because of the special rate reduction for manufacturers.

Date: 2004
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