Comments on: Who carries the heavier tax burden: corporations or people? http://blogs.reuters.com/muniland/2011/12/21/who-carries-the-heavier-tax-burden-corporations-or-people/ Bridges, budgets, bonds Mon, 24 Nov 2014 00:29:08 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: Toenail http://blogs.reuters.com/muniland/2011/12/21/who-carries-the-heavier-tax-burden-corporations-or-people/comment-page-1/#comment-629 Wed, 21 Dec 2011 14:33:16 +0000 http://blogs.reuters.com/muniland/?p=6210#comment-629 Please, this is preposterous. A well-established elementary result of tax theory, usually taught on day 1 of tax economics classes, is that ALL tax, including that levied on firms, is ultimately born by people – the firm’s owners, employees or customers. Furthermore, another well-established fact is that both economic models and real-world experience show that the optimal corporate income tax rate for a small open economy is ZERO, because it causes more distortions to the economy than other taxation means.

Why large countries keep a corporate income tax is because

1) otherwise, everyone wealthy enough would incorporate and evade tax and

2) basically being large, they can, even though they fudge it a lot for internationally active firms, with very wide differences between nominal and effective tax rates for political reasons.

Only the ignorant – of which there are many – call for higher corporate income tax rates out of principle.

See for instance this : http://ec.europa.eu/taxation_customs/res ources/documents/taxation/gen_info/econo mic_analysis/tax_papers/taxation_paper_1 5_en.pdf

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