TY  - JOUR
AU  - Gordon,Roger H.
AU  - MacKie-Mason,Jeffrey K.
TI  - Tax Distortions to the Choice of Organizational Form
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 4227
PY  - 1992
Y2  - December 1992
UR  - http://www.nber.org/papers/w4227
L1  - http://www.nber.org/papers/w4227.pdf
N1  - Author contact info:
Roger H. Gordon
Department of Economics 0508
University of California, San Diego
9500 Gilman Drive, Dept. 0508
La Jolla, CA 92093
Tel: 858/534-4828
Fax: 858/534-7040
E-Mail: rogordon@ucsd.edu

Jeffrey K. MacKie-Mason
Department of Economics
462 Lorch Hall
Ann Arbor, MI  48109-1220
Tel: 47/228-55127 or 47/2285-5035 fax
E-Mail: jmm@umich.edu
AB  - Income from corporate and noncorporate firms is treated very differently under the tax law. To what degree do firms change their form of organization in response? Since the relative tax treatment depends on the tax bracket of the investor, the answer will vary by the bracket of the owners. To estimate the role of taxes, we estimate what size the nontax advantage to incorporating must take in each industry so that forecasted choices for organizational form, aggregated over investors in different tax brackets, are consistent with the aggregate evidence. While these nontax costs can be large, noncorporate activity tends to be concentrated in industries where these costs are small, leading to little excess burden from the tax distortion to organizational form.
ER  -