There are circumstances under which the corporation tax is equivalent to an economic profits tax.

Question

Quizplus · Accepted Answer

Under certain assumptions, such as perfect competition and no externalities, the corporation tax can be shown to lead to the same level of economic efficiency as an economic profits tax, which taxes a firm's profits above a normal rate of return. Therefore, in these circumstances, the corporation tax can be considered equivalent to an economic profits tax.

There Are Circumstances Under Which the Corporation Tax Is Equivalent