ABSTRACT
An income tax which is imposed on the income of a particular industry may be graduated according to either a personal or an impersonal criterion. If the criterion is a personal one, then the income tax will be graduated according to the income and family responsibilities of the person who comes into receipt of the dividends paid by the industry. The revenue collected by the Government from the tax is spent in such a way as not to affect the demand for the commodity which this industry itself is producing. The tax takes away part of the return to the fixed factors. To give an arithmetical example one may suppose that the tax imposed on the industry concerned is at a flat rate of 20 per cent. When the partial income tax is imposed, only one set of share prices will be affected: the share prices of other firms will be unaffected. It will be an instance of tax capitalisation.
