JD:
what's wrong with the theory of tax incidence that says that when they are
officially "paying" the tax, the corporations are really shifting the tax
to consumers or to workers (rather than the stockholders)? It seems to me
that the only exception to the corporations' ability to do this kind of
shifting is when they own depletable resources (and capture scarcity
rents).
[mbs] Insofar as capital is immobile, it has to eat
the tax. Immobile doesn't just mean some hunk of
equipment whose cost of relocation is prohibitive.
It means mobile capital that must be fixed inside
the U.S. to perform its functions, such as serving
customers in physical proximity to it. If you believe
capital is perfectly mobile, like the conservatives do,
then there is no point in a corporate income tax.
JD:
But aren't there special tax breaks for corporations that own
depletable resources?
mbs: yes.
JD:
Also, if the tax law _changes_, it's quite possible
that it catches many corporations by surprise (since it's usually so
complicated), so that they are unable to pass the tax totally onto workers
and consumers until they learn how to do it. But most tax changes seem to
lower the official corporate tax burden, not raise it.
[mbs] not likely. Corporations have a well articulated
apparatus in D.C. to monitor changes in tax law. They
are better situated to comprehend the complexity than
anyone else. Often as not, they are the authors of such
complexity, not the victims, except when one sector gores
another.
JD;
Is McIntyre's research drawing our attention away from what's important?
Findings like his have played a major political role
in promoting positive tax reform. Hopefully the left
will have enough brains to make use of his report.
mbs
