Document Type


Publication Date

Spring 2008


This Article challenges recent attempts by influential scholars to rationalize the existence of the corporate income tax. The corporate income tax has long been considered unjustifiable on traditional tax policy grounds. The new justifications recognize this, yet argue that the tax is still desirable because it promotes other goals, such as improvement of corporate governance and restraint of undesirable corporate management power accumulation. This Article demonstrates that the existence and magnitude of these alleged benefits of the corporate income tax are doubtful. Yet, the Article argues, even if taken as correct, the recent rationalization of the corporate income tax cannot support its retention, since it misses certain crucial steps in the analysis. First, the rationalization does not compare the effects of the corporate income tax with its alternatives. This Article demonstrates that once such comparison takes place, the corporate income tax proves to be less desirable than its alternative on the very grounds promoted by its proponents. Secondly, the support of the corporate income tax completely ignores the social costs of the tax. This Article argues that once taken into account, such costs may overwhelm the alleged benefits, if any. Finally, the Article claims that the recent support of the corporate income tax is based on a strong, yet unproven, popular intuition that the tax is fair. The Article goes on to explain the uncertainty that governs the economic analysis of the burden of the tax, which results in confusion and the inability to assess the fairness of the tax as a whole. This understanding should pull the carpet from underneath the very basis of the arguments in support of the corporate income tax. The Article concludes by asserting that the tax not only should, but also could, be repealed consistent with accepted tax policy principles.

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