Modernizing Business Taxation /

Integration of the corporate income tax and of the personal income tax, through the dividend-tax credit and the preferential treatment of capital gains, mitigates the potential for double- taxation. [...] We argue that exposure to international capital markets, which implies that the incidence of the corporate tax is largely shifted to labour, and the fact that most capital income can be sheltered from the personal income tax undermine the withholding role of the corporate tax and make integration provisions unnecessary. [...] The challenge has featured prominently in the US of the residence rule for passive income – and the President’s Advisory Panel for Tax Reform, the UK difficulty of countering tax havens are alleged to Mirrlees Review and the so-called Henry Report in contribute to profit shifting, which put further Australia. [...] It taxes as the taxation of unincorporated business, the shareholder income as it is earned and provides taxation of financial intermediaries, integration relief through the dividend tax credit and the with the personal tax and federal-provincial tax partial tax-exemption of capital gains when income harmonization. [...] The implication is that integration through PIT Meanwhile, the marginal cost of public funds provisions serves little purpose since it does not (MCPF) measures the economic cost per additional undo the effects of the CIT, and taxing normal dollar of revenue raised and, unlike the METR, shareholder income in corporations by the CIT is based on an estimate of the induced investment serves little pur