Capital Tax Incidence: First Impressions from the Time Series

Casey Mulligan

No 9374, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Aggregate time series data are used to calculate the incidence of capital taxes. Part of the analysis is borrowed from the literature on sales tax incidence, comparing pre-tax interest rates with tax rates. The other part compares tax rates with after-tax interest rates, which are measured separately and independently from pre-tax interest rates. I find a positive correlation between capital tax rates and pre-tax interest rates, and little correlation between after-tax interest rates and tax rates, but both of these findings seem to derive in part from the effect of the business cycle on tax rate measures, as opposed to a shifting of capital taxes. The empirical findings are consistent with significant capital tax shifting in the long run, little shifting in the short run, and clearly rule out over-shifting.

JEL-codes: E22 H22 (search for similar items in EconPapers)
Date: 2002-12
New Economics Papers: this item is included in nep-pbe
Note: EFG PE
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Citations: View citations in EconPapers (6)

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