Taxing Corporate Income in the 21st Century

Description

This book was first published in 2007. Most countries levy taxes on corporations, but the impact - and therefore the wisdom - of such taxes is highly controversial among economists. Does the burden of these taxes fall on wealthy shareowners, or is it passed along to those who work for, or buy the products of, corporations? Can a country with high corporate taxes remain competitive in the global economy? This book features research by leading economists and accountants that sheds light on these and related questions, including how taxes affect corporate dividend policy, stock market value, avoidance, and evasion. The studies promise to inform both future tax policy and regulatory policy, especially in light of the Sarbanes-Oxley Act and other actions by the Securities and Exchange Commission that are having profound effects on the market for tax planning and auditing in the wake of the well-publicized accounting scandals in Enron and WorldCom.

Alan J. Auerbach is Robert D. Burch Professor of Economics and Law, Director of the Burch Center for Tax Policy and Public Finance, and former Chair of the Economics Department at the University of California, Berkeley. He taught at Harvard and the University of Pennsylvania before moving to California. Professor Auerbach is a Research Associate of the National Bureau of Economic Research and was Deputy Chief of Staff on the U.S. Congress's Joint Committee on Taxation in 1992. He has served as a member of the Executive Committee and as Vice President of the American Economic Association, and is a Fellow of the Econometric Society and of the American Academy of Arts and Sciences. Professor Auerbach is a member of the Advisory Committee, Bureau of Economic Analysis, U.S. Department of Commerce, the Revenue Estimating Review Panel of the U.S. Congress's Joint Committee on Taxation, and the Board of Academic Advisors of the International Tax Policy Forum. He is the editor or co-editor of ten books, and author or co-author of three books. James R. Hines Jr. is Professor of Economics at the University of Michigan, Visiting Professor of Law at the University of Michigan Law School, and Research Director of the Office of Tax Policy Research at the Stephen M. Ross School of Business at the University of Michigan. He taught at Princeton and at Harvard before moving to Michigan in 1997. He is a Research Associate of the National Bureau of Economic Research, and was previously an economist in the United States Department of Commerce. Professor Hines is a Research Fellow with the CESifo Research Network in Munich, Germany, and Research Director of the International Tax Policy Forum. He currently serves on the editorial boards of the Journal of Economic Perspectives, New Palgrave Dictionary of Economics, second edition, Journal of Regional Science, B.E. Journals in Economic Analysis and Policy, and the Journal of International Financial Markets, Institutions and Money. Joel Slemrod is the Paul W. McCracken Collegiate Professor of Business Economics and Public Policy at the Stephen M. Ross School of Business at the University of Michigan, and also serves as Director of the Office of Tax Policy Research, an interdisciplinary research center housed at the Ross School. Professor Slemrod was a National Fellow at the Hoover Institution and in 1984-85 was the senior staff economist for tax policy at the President's Council of Economic Advisers. He has also been a consultant to the U.S. Department of Treasury, the Canadian Department of Finance, the New Zealand Department of Treasury, the South African Ministry of Finance, the World Bank, and the OECD. He is a member of the Joint Committee on Taxation Revenue Estimating Board and has testified before the Congress on domestic and international taxation issues. From 1992 to 1998 Professor Slemrod was editor of the National Tax Journal. He is the editor or co-editor of ten books, and is co-author with Jon Bakija of Taxing Ourselves: A Citizen's Guide to the Debate over Taxes, now in its third edition.

In this book most of the top stars of public finance economics grapple with a series of issues surrounding the taxation of corporate income. These include, among others, the reactions of corporations to changes in the corporate tax rate, tha reactions of the market to changes in the tax on dividends, and the efforts of corporations ( by choosing their location, by their debt-finance decisions, and by other means) to reduce their tax liabilities. The authors do not reach a clear consensus, but expose the reader to the many facets (of theory, of hypothesis framing and testing, and of data analysis) that turn out to be important as one delves into this topic. These matters are profound, rich and challenging to professionals interested in public finance and corporate behavior. -- Arnold C. Harberger, University of California, Los Angeles The corporate income tax has a long history of analysis and consideration by economists, going back to Harberger's pathbreaking work in the 1960's. Yet questions of its efficiency costs and incidence remain controversial today - and crucial to U.S. policy discussions of capital formation, competitiveness, and wages and income distribution. This volume collects important new papers on the consequences of the double taxation of dividends, corporate taxation of multinational firms, and links between corporate taxation and corporate governance. The book should be read both by economists interested in capital income taxation and by policy analysts piecing together the role of corporate taxation in tax reform. -- R. Glenn Hubbard, Dean, Columbia Business School Understanding the effects of the corporate tax is one of the central and most difficult elements of tax policy. This book provides a comprehensive analysis of the issue. Auerbach, Hines, and Slemrod have brought together the leading researchers in the field, many of them using new or unique data sets to understand the effects of taxing corporations. The analyses will help further the debate on corporate tax compliance, international competition, the effects of dividend taxation, and many other issues of central importance to tax reform and to our economy. -- David Weisbach, The University of Chicago Anyone interested in the issues related to taxing corporate income will find this book well worth their time to read. As highlighted in many of the discussant comments, as many if not more questions are raised than answered in many of the papers and I believe the book will prove to be fertile ground for graduate students and others searching for important and timely research questions. -- Terry Shevlin, University of Washington