Published on 01 May 09
by "AUSTRALIAN TAX FORUM" JOURNAL ARTICLE
The important early findings of Domar and Musgrave on the effects on risk-taking of loss-offset provisions under the personal or corporate income tax have been seriously challenged in more recent analysis by Kaplow and others. This dispute, although it is still unresolved, has significant implications in other areas of tax policy such as the choice of personal tax base between income and consumption. It also has an important bearing on the estimation of the welfare cost of the corporate tax and on the policy trade-off between equity and efficiency under income taxation. Musgrave’s policy stance on these interrelated issues is generally well supported by the analysis in this paper.
John works for the Taxation Law and Policy Research Institute at Monash University.
Current at May 2009
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