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January 2, 2013
Sanchirico: Taxing Public Companies
Suppose someone proposed a special tax on businesses that make their
ownership shares publicly available in affordable, easy-to-sell units.
Such an idea would probably generate a lot of push-back. Efficiency
advocates might complain that it taxed the very attributes that make
equity markets efficient. Progressivity advocates might object on the
grounds that it taxed those who have no alternative to publicly
available investment opportunities.
In fact we already have such a tax. We call it the corporate income tax.
In what sense is the corporate tax a special levy on being publicly
traded? And what do we know about the policy implications of such a
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