Taxes, Organizational Form, and the Deadweight Loss of the Corporate Income Tax

Austan Goolsbee

No 6173, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: By changing the relative gain to incorporation, corporate taxation can play an important role in a firm's choice of organizational form. General equilibrium models have shown that substantial shifting of organizational form in response to tax rates implies a large deadweight loss of taxation. This paper estimates the impact of taxes on organizational form using data from 1900-1939. The results indicate that the effect of taxes is significant but small. A corporate rate increase of .10 raises the non-corporate share of capital .002-.03. The implied deadweight loss of the corporate income tax is around 5-10% of revenue.

JEL-codes: H25 L22 (search for similar items in EconPapers)
Date: 1997-09
Note: PE
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Citations: View citations in EconPapers (1)

Published as Journal of Public Economics, Vol. 69 (July 1998): 143-152.

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Journal Article: Taxes, organizational form, and the deadweight loss of the corporate income tax (1998)
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