Differential Taxation of for-Profit and Nonprofit Firms: a Computational General Equilibrium Approach  

Oleh:

Johnson, Marianne F.

Jenis: Article from Journal - ilmiah internasional
Dalam koleksi: Public Finance Review vol. 31 no. 6 (Nov. 2003), page 623-647.
Topik: nonprofits; corporate tax exemption; computational general equilibrium
Fulltext: 623PFR316.pdf (126.2KB)

Isi artikel

A small-scale computational general equilibrium model is used to examine the efficiency costs of exempting commercial nonprofits from the corporate income tax when they compete directly with for-profit firms. Simulation results from differential-incidence experiments indicate significant welfare gains when the taxwedg e is reduced at the margin between the for-profit and nonprofit firms and the change in government revenue is financed by lump-sum taxes. However, although welfare gains exist at the margin, average excess burden estimates suggest that some level of differential taxation is welfare-improving if nonprofits contribute to the production of a good with positive externalities. Results are compared with those from the literature on the differential taxation of corporate and noncorporate firms and are found generally consistent.

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