A General Equilibrium Evaluation of Corporate Income Tax Reform

Yolanda Kodrzycki Henderson

Economic Inquiry, 1987, vol. 25, issue 4, 565-81

Abstract: This study provides new insights into the effects of the corporate income tax by introducing a general-equi librium model in which households choose portfolios composed of housi ng and nonhousing assets, industries make investment decisions based on Hall-Jorgenson cost-of-capital formulas, and the corporate-noncorp orate mix in each industry is endogenous. The annual efficiency cost of an unintegrated tax on corporations is found to be about 3.5 perce nt of expanded national income. This new estimate is intended to spur further investigation of individuals' demand for owner-occupied hous ing and firms' decisions about incorporation. Copyright 1987 by Oxford University Press.

Date: 1987
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