Explain the factors that influence the ultimate burden of the corporate income tax. What conclusion did Arnold Harberger draw about the incidence of the corporate income tax?
What will be an ideal response?
The ultimate burden of the corporate income tax depends on several factors: the relative capital/labor intensity of the corporate and non-corporate sectors of the economy, the ease with which capital and labor can be substituted in the two sectors, and the elasticities of demand for the products in the corporate and noncorporate sectors. Harberger concluded that owners of corporations, proprietorships, and partnerships all bear the burden of the corporate tax in rough proportion to profits.
You might also like to view...
Opportunity cost is the combined value of all of the other alternatives that go unselected.
Answer the following statement true (T) or false (F)
A nonexcludable public good is
A. nonrivalrous in consumption. B. rivalrous in consumption. C. asymmetric. D. a good for which it is impossible (or prohibitively costly) to exclude someone from receiving the benefits of its services. E. a and d
Vertical contracts that aim to decrease retailer prices typically
a. Benefit the consumer and the manufacturer but hurt the retailer b. Benefit the manufacturer and retailer but hurt the consumer c. Benefit the retailer and consumer but hurt the manufacturer d. Benefit the manufacturer, retailer and consumer
A situation in which a benefit or a cost associated with an economic activity spills over to third parties is called
A) a public good. B) a merit good. C) an externality. D) the free-rider problem.