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Have Excess Returns to Corporations Been Increasing Over Time?

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  • Laura Power
  • Austin Frerick

Abstract

This paper examines the difference between a corporate income tax base and a corporate consumption tax base over time. Using a micro-data panel of tax returns of C corporations from 1992 to 2013, we estimate the fraction of the tax base attributable to the risk-free return in each year, and show that it has gradually declined over time, averaging 40 percent from 1992–2002 and 25 percent from 2003–2013. This decrease means that the difference between an income tax base and a consumption tax base has also declined, and suggests that “excess” returns are becoming more important to the tax base.

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  • Laura Power & Austin Frerick, 2016. "Have Excess Returns to Corporations Been Increasing Over Time?," National Tax Journal, National Tax Association;National Tax Journal, vol. 69(4), pages 831-846, December.
    • Handle: RePEc:ntj:journl:v:69:y:2016:i:4:p:831-846
    DOI: 10.17310/ntj.2016.4.05
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    Cited by:

    1. Edward Fox, 2020. "Does Capital Bear the U.S. Corporate Tax After All? New Evidence from Corporate Tax Returns," Journal of Empirical Legal Studies, John Wiley & Sons, vol. 17(1), pages 71-115, March.
    2. Robin Boadway & Pierre Pestieau, 2022. "The Wealth Tax and the Tax Mix," Canadian Tax Journal, Canadian Tax Foundation, vol. 70(Supplemen), pages 185-208.
    3. Dorian Carloni & Terry Dinan, 2021. "Distributional Effects of Reducing Carbon Dioxide Emissions With a Carbon Tax: Working Paper 2021-11," Working Papers 57399, Congressional Budget Office.

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