Munich Personal RePEc Archive

The Non-neutrality of Corporate Tax: An Entrepreneurial Perspective

Filoso, Valerio (2007): The Non-neutrality of Corporate Tax: An Entrepreneurial Perspective.

[img]
Preview
PDF
MPRA_paper_4183.pdf

Download (137kB) | Preview

Abstract

While corporate 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 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 taxation appears clearly as a direct tax on market adjustments and as an indirect tax on wages.

UB_LMU-Logo
MPRA is a RePEc service hosted by
the Munich University Library in Germany.