he objective of this article is to study the intersectoral and intertemporal efficiency effects as well as the distribution effects of integrating corporate and personal income taxes. This article presents a dynamic general equilibrium model of the U.S. economy. The model accomodates optimal intertemporal investment decisions and optimal allocation of investment across sectors, intertemporal household consumption/savings and labor/leisure decisions, and government deficits and financial crowding-out. Simulation results suggest that the elimination of the corporate income tax and its replacement by increased personal income tax rates would yield long-run benefits that are at best 17 percent of the present value of future consumption and leisure. Also, the average long-run gains are more than three times as large as the average short-run gains: it takes time for the efficiency gains of integration to emerge. Finally, integration is shown not to be a Pareto improvement in that low-income households are worse off after integration.

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• Economia e Gestão - Ciências Sociais