Personal Taxation, Portfolio Choice and The Effect of the Corporation Income Tax

Martin Feldstein and Joel Slemrod

No 241, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Extending the traditional treatment of the corporate tax to an economy with a progressive personal tax fundamentally changes the analysis. While the corporate tax system (CTS) does increase the total tax rate on corporate source income for some investors, the exclusion of retained earnings implies that the CTS lowers the tax rate for high-income investors. Analyzing such an economy requires replacing the traditional "equal-yield" equilibrium condition with a more general portfolio balance model. In this model, introducing a CTS can actually increase the corporate share of the capital stock even though the relative tax rate on corporate income rises.

Date: 1980-11
Note: PE
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (29)

Published as Feldstein, Martin S. and Slemrod, Joel. "Personal Taxation, Portfolio Choice, and the Effect of the Corporation Income Tax." Journal of Political Economy, Vol. 88, No. 5, (Oct. 1980), pp. 854-866.

Downloads: (external link)
http://www.nber.org/papers/w0241.pdf (application/pdf)

Related works:
Journal Article: Personal Taxation, Portfolio Choice, and the Effect of the Corporation Income Tax (1980)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:0241

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w0241

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().