Document Type


Publication Title

Tax Law Review

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income tax, limited liability, corporate law


Law | Tax Law


This Article began with a search for a theoretical underpinning that could explain the structure of the current corporate income tax regime, and found such underpinning lacking. It proposed an alternative underpinning for a "corporate" income tax based on the theory of the firm. The basic idea is that every firm generates incremental economic returns that would not be achieved but for its organizational structure as a firm. Thus, a sovereign could rationally choose to confiscate a portion of such returns, since it has made such returns possible (by enacting legislation that recognizes firms, etc.). (Whether or not a sovereign should confiscate a portion of such returns is a different matter entirely.) If it chooses to do so, the resulting "corporate" tax would not be a corporate tax at all, but a tax on all entities. The Article then showed how such an entity income tax might be structured.

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