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A New-Knowledge Approach to Corporate Income Tax Efficiency
journal contributionposted on 2020-12-01, 00:00 authored by Mark Smith
This article adopts a new-knowledge approach to tax policy analysis as a means of exploring the efficiency of the corporate income tax. The foundation stone of this approach is the idea that new knowledge and wealth creation are coextensive. The idea that new knowledge and wealth creation are coextensive is already inherent in some aspects of tax law (e.g. R&D regimes), economics (e.g. endogenous growth theory) and fundamental physics (i.e. constructor theory). From a corporate income tax perspective, the implications that flow from the new-knowledge approach include: that knowledge is by far the most important factor of production; that economic rent (or pure profit) is ultimately nothing more than a function of new knowledge; and that tax efficiency should be recast in terms of the excess burden placed on knowledge production. Accordingly, this article seeks to explain the negative impact of the corporate income tax on knowledge production and, by extension, sustainable productivity growth.