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The Corporate Income Tax: An Entrepreneurial Perspective

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  • Filoso, Valerio

Abstract

While corporate income taxation is a major issue in the debate over international finance, economic theory has no clear stance on who bears its burden. On balance, economists seem still more prone to accept that taxing profits does not affect corporations’ outcomes. This paper makes three cases for non-neutrality. First, since corporate income taxation is asymmetric between profit and loss, the tax rate may change the ranking of alternative investments. Secondly, the imperfect observability of the use of internal resources makes pure economic profits very difficult to detect. Thirdly, when the pervasive role of entrepreneurship is fully taken into account, corporate income taxation appears clearly as a direct tax on market adjustments and successful speculation.

Suggested Citation

  • Filoso, Valerio, 2010. "The Corporate Income Tax: An Entrepreneurial Perspective," MPRA Paper 42967, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:42967
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    References listed on IDEAS

    as
    1. Blaug,Mark, 1997. "Economic Theory in Retrospect," Cambridge Books, Cambridge University Press, number 9780521577014, November.
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    3. Marcin Piatkowski & Mariusz Jarmuzek, 2008. "Zero Corporate Income Tax in Moldova: Tax Competition and Its Implications for Eastern Europe," IMF Working Papers 2008/203, International Monetary Fund.
    4. Spicer, Michael W., 1995. "On Friedrich Hayek and Taxation: Rationality, Rules, and Majority Rule," National Tax Journal, National Tax Association;National Tax Journal, vol. 48(1), pages 103-112, March.
    5. Martin Feldstein & Jerry Green & Eytan Sheshinski, 1979. "Corporate Financial Policy and Taxation in a Growing Economy," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 93(3), pages 411-432.
    6. Paolo M. Panteghini, 2007. "Corporate Taxation in a Dynamic World," Springer Books, Springer, number 978-3-540-71406-4, June.
    7. J. E. Stiglitz, 1969. "The Effects of Income, Wealth, and Capital Gains Taxation on Risk-Taking," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 83(2), pages 263-283.
    8. Spicer, Michael W., 1995. "On Friedrich Hayek and Taxation: Rationality, Rules, and Majority Rule," National Tax Journal, National Tax Association, vol. 48(1), pages 103-12, March.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Corporate Taxation; Profits; Austrian Economics;
    All these keywords.

    JEL classification:

    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • B25 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Historical; Institutional; Evolutionary; Austrian; Stockholm School

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