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- Title
DISCUSSION.
- Authors
Ratchford, B. U.; Newcomer, Mabel; Hall, James K.
- Abstract
The article discusses the theoretical foundations of corporate income tax. In view of its different and ever changing economic effects, it is not surprising that different economic groups should take radically different views of the tax. While politically they may be necessary as an adjunct to wage controls in a period of inflation, high corporate taxes have an economic effect which tends to defeat such controls. High corporate taxes, and especially excess profits taxes, permit the employer to hoard scarce types of labor and to grant wage increases freely with relatively little cost to himself. According to the author, government spending has been an important factor in creating business income. The federal government is far and away the largest customer that business has and can be counted on to pay its bills besides. This is in large part responsible for the long-continued business expansion. Even though the government recaptures a substantial part of the profits through its tax system, on balance, business may be the gainer, and the motive for further expansion remains. The only question is as to the manner in which the government finances its spending.
- Subjects
UNITED States; CORPORATE taxes; LABOR incentives; SAVINGS; INCOME tax; INVESTMENTS; CORPORATE finance; PRICE inflation &; taxation; WAGE increases; GOVERNMENT spending policy
- Publication
American Economic Review, 1954, Vol 44, Issue 2, p535
- ISSN
0002-8282
- Publication type
Article