INFLATION AND THE TAXATION OF CAPITAL INCOME IN THE CORPORATE SECTOR

1 December 1979

journal article
research article
Published by University of Chicago Press in National Tax Journal

Vol. 32 (4) , 445-470
https://doi.org/10.1086/ntj41862265

Abstract

This detailed examination of the effect of inflation on the taxation of capital used by nonfinancial corporations considers not only the tax paid by the corporations themselves but also the tax paid by the individuals and institutions that provide capital to the corporate sector. Although corporations deduct nominal interest payments that exceed real interest, the additional taxes that lenders pay slightly exceed the tax saving by corporate borrowers. Our calculations indicate that inflation raised the 1977 tax burden on corporate sector capital income by more than $32 billion, a 50 percent increase in the total tax burden.

Keywords

This publication has 3 references indexed in Scilit:

Inflation, Tax Rules, and the Long-Term Interest Rate
Brookings Papers on Economic Activity, 1978
CORPORATE TAX INTEGRATION: THE ESTIMATED EFFECTS ON CAPITAL ACCUMULATION AND TAX DISTRIBUTION OF TWO INTEGRATION PROPOSALS
National Tax Journal, 1977
Pathways to Tax Reform
Published by Harvard University Press ,1973