ANU Trevor Swan Distinguished Lectures in Economics: The role of the corporate tax
Event details
Public Lecture
Date & time
Thursday 26 April 2012
5.30pm–7.00pm
Venue
Weston Lecture Theatre, Crawford School of Public Policy, #132 Lennox Crossing, ANU
Speaker
Professor Roger Gordon, Department of Economics, University of California, San Diego
Contacts
There has been much debate, both among policy makers and among economists, about the merits of alternative directions for reform to existing corporate income taxes. Debates cover the choice not only of the corporate tax rate, but also of the tax base under the corporate tax and the tax treatment of multinationals. Yet we lack a clear underlying framework to judge what role the corporate tax plays in the overall tax structure.
This lecture will focus on the interplay between the design of the corporate tax and that of the personal income tax - the corporate tax cannot be considered in isolation. Firms face substantial discretion about whether to have earnings reported as corporate profits, taxed under the corporate tax, or instead as some form of individual income (whether to employees, managers, or investors) taxable under the personal income tax. Any differences in tax treatment, depending on where income is reported or on the form that the income takes, generate misallocations. Such differential tax rates, in particular, distort the choice whether to incorporate, if corporate whether to raise funds through debt or equity, whether to become self-employed, and whether to pay employees through wages or some other form of compensation. These tax differentials should also be the focus when considering the tax treatment of multinationals.
The proposed framework provides a clear basis for understanding the economic effects of alternative choices for the corporate tax rate, for the corporate tax base, and for the tax treatment of multinationals.
Roger Gordon has been a professor of economics at UCSD since 2000. Prior to this, he taught at the University of Michigan and Princeton University, and had been a member of the technical staff at Bell Laboratories. He is a past editor of the Journal of Economic Literature, the Journal of Public Economics and the American Economic Review, a research associate of the National Bureau of Economic Research, and a Fellow of the Econometric Society and the American Academy of Arts and Sciences.
Professor Gordon’s visit is an initiative of the Australia-Japan Research Centre, and is supported by the Research School of Asia and the Pacific’s Distinguished Visitor Program.
The generosity of the ACT Branch of the Economic Society in providing financial support is gratefully acknowledged.
This lecture will focus on the interplay between the design of the corporate tax and that of the personal income tax - the corporate tax cannot be considered in isolation. Firms face substantial discretion about whether to have earnings reported as corporate profits, taxed under the corporate tax, or instead as some form of individual income (whether to employees, managers, or investors) taxable under the personal income tax. Any differences in tax treatment, depending on where income is reported or on the form that the income takes, generate misallocations. Such differential tax rates, in particular, distort the choice whether to incorporate, if corporate whether to raise funds through debt or equity, whether to become self-employed, and whether to pay employees through wages or some other form of compensation. These tax differentials should also be the focus when considering the tax treatment of multinationals.
The proposed framework provides a clear basis for understanding the economic effects of alternative choices for the corporate tax rate, for the corporate tax base, and for the tax treatment of multinationals.
Roger Gordon has been a professor of economics at UCSD since 2000. Prior to this, he taught at the University of Michigan and Princeton University, and had been a member of the technical staff at Bell Laboratories. He is a past editor of the Journal of Economic Literature, the Journal of Public Economics and the American Economic Review, a research associate of the National Bureau of Economic Research, and a Fellow of the Econometric Society and the American Academy of Arts and Sciences.
Professor Gordon’s visit is an initiative of the Australia-Japan Research Centre, and is supported by the Research School of Asia and the Pacific’s Distinguished Visitor Program.
The generosity of the ACT Branch of the Economic Society in providing financial support is gratefully acknowledged.
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