March 23, 2014
TAX WHAT YOU DON'T WANT, NOT WHAT YOU DO:
Simulating the Elimination of the U.S. Corporate Income Tax (Hans Fehr, Sabine Jokisch, Ashwin Kambhampati, Laurence J. Kotlikoff.NBER Working Paper No. 19757)
Posted by Orrin Judd at March 23, 2014 8:25 AMWe simulate corporate tax reform in a single good, five-region (U.S., Europe, Japan, China, India) model, featuring skilled and unskilled labor, detailed region-specific demographics and fiscal policies. Eliminating the model's U.S. corporate income tax produces rapid and dramatic increases in the model's level of U.S. investment, output, and real wages, making the tax cut self-financing to a significant extent.