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Taxable Corporate Profits
Author(s) -
Griffith Rachel,
Miller Helen
Publication year - 2014
Publication title -
fiscal studies
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.63
H-Index - 40
eISSN - 1475-5890
pISSN - 0143-5671
DOI - 10.1111/j.1475-5890.2014.12041.x
Subject(s) - taxable income , corporate tax , economics , incentive , dividend , monetary economics , multinational corporation , dividend tax , income tax , capital (architecture) , labour economics , tax avoidance , state income tax , double taxation , finance , tax reform , market economy , gross income , accounting , archaeology , history
Revenues from corporate income taxes have remained relatively stable as a share of national income over the last three decades despite reductions in corporate tax rates and increased opportunities for multinational tax avoidance. This is largely explained by an increase in the share of corporate profits in national income. In this paper, we discuss the sources of corporate profits, and specifically corporate taxable profits; these include a normal return to capital investment, returns to labour or entrepreneurial effort that are realised as dividends or capital gains, and returns to market power. We relate these components of profits to the ways that corporate taxes can change incentives to invest or exert effort, and we discuss some implications for policy.