The Taxation of Capital Income

This book offers seven theoretical essays examining how capital income taxation influences firm behavior, providing insights into tax reform and corporate finance.

This volume presents a collection of seven theoretical essays that delve into the effects of capital income taxation on firm behavior. The essays are meticulously organized into three distinct sections that explore optimal tax design, firm financial policy, and the impact of inflation. Together, these essays illustrate the significant influence that taxation exerts on American corporations, providing valuable insights into the complexities of tax reform.

In The Taxation of Capital Income, Alan Auerbach presents results that offer potential policy recommendations for the government aimed at fostering the optimal accumulation of capital. He addresses the implications of discrepancies between nominal and real economic depreciation rates for capital taxation, proposing practical guidelines for assessing when capital taxation remains neutral across various investment projects. This analysis is crucial for understanding the broader economic landscape.

Moreover, the essays contribute to ongoing discussions regarding the integration of corporate and personal taxes on capital income. They also tackle the intriguing question of why corporations choose to distribute dividends to their shareholders. By examining these themes, The Taxation of Capital Income serves not only as a theoretical exploration but also as a practical guide for policymakers engaged in the challenging task of tax reform.