Simulating the Elimination of the U.S. Corporate Income Tax
NBER Working Paper No. 19757
We 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. Somewhat smaller gains arise from revenue-neutral base broadening, specifically cutting the corporate tax rate to 9 percent and eliminating tax loop-holes.
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A data appendix is available at http://www.nber.org/data-appendix/w19757
This paper was revised on April 23, 2014
Document Object Identifier (DOI): 10.3386/w19757
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