ABSTRACT
As globalization challenges national borders, governments are discovering that their tax base is eroding, especially their ability to tax corporate profits. The share of total taxes from labor has been increasing while the share on capital has been declining.1 In the European Union half of all tax receipts were derived from capital in 1980; by the mid1990s it had fallen to 35 percent. At the same time, the share of taxes collected from labor rose from 35 percent to over 40 percent. In the United States, which has historically had a lower capital share, there is a similar pattern: the capital share of 27 percent in 1965 has fallen to only 15 percent in 1999. It is important to note that this minimal corporate share occurred at a moment of historical records in corporate profits.2
