The Economics of Corporate Tax Selfishness‪.‬

INTRODUCTION The corporation income tax occupies a tenuous place in the economics of taxation. The theory of taxation stresses the importance of looking through the corporate entity and tracing the incidence of the tax to the shareholders, workers, and customers. In a comprehensive income tax, there is no reason to tax the income generated by corporations any differently than any other source of income, and justifications have centered on its role as a backstop or withholding device for an imperfect personal income tax. The sharp decline in the relative size of federal corporation income tax revenues since the 1950s, from 6.4 percent of GDP in 1951 to less than 1.5 percent of GDP in the last few years, has been welcomed by some as a benign development. Indeed, part of the decline has been due to a process of "do-it-yourself integration," as a growing fraction of businesses operate as pass-through entities, such as S corporations and limited liability companies, and as indebtedness increases.