The short-run shifting of company income tax in Australia : an econometric investigation

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nnnnn In this paper the possibility of short-run shifting of the company income tax in Australia is considered. Early empirical and theoretical discussion of such shifting, mainly of the U.S. corporation tax, as reviewed in Chapter 1, proved to be inconclusive.nnnnn A path breaking study of the short-run shifting of the U.S. corporation tax by Krzyzaniak and Musgrave in, 1963 was the first attempt at the isolation of the influence of the tax on the corporate rate of return. The K-M model and their results are reviewed in Chapter 2 and in Chapter 3 the model is applied using Australian data. Results of the application of the K-M model to other countries, along with the Australian results, and criticisms of their model are reviewed in Chapter 4. Although the debate as to the validity of the K-M approach is as yet unresolved, the Australian estimates showing in excess of 200% shifting appear exceedingly high, and do not tend to support the K-M hypothesis that their model does isolate the

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