Inflation and the Taxation of Capital Income in the Corporate Sector / Martin Feldstein, Lawrence H. Summers.

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Feldstein, Martin

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Material type: Text

TextSeries: Working Paper Series (National Bureau of Economic Research) ; no. w0312.Publication details: Cambridge, Mass. National Bureau of Economic Research 1979.Description: 1 online resource: illustrations (black and white)Online resources:

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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 them- selves 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.

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Working Paper	Biblioteca Digital	Colección NBER	nber w0312 (Browse shelf(Opens below))	Not For Loan

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Previous	nber w0309 How Elastic is The Demand for Labor? /	nber w0310 Domestic Savings and International Capital Flows /	nber w0311 Monetary Policy Under Exchange Rate Flexibility /	nber w0312 Inflation and the Taxation of Capital Income in the Corporate Sector /	nber w0313 A Note on Stochastic Rationing Mechanisms /	nber w0314 The Effect of Social Security on Private Savings: The Time Series Evidence /	nber w0315 An Empirical Analysis of the Fixed Coefficient 'Manpower Requirements' Model, 1960-1970 /	Next

1979.

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 them- selves 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.