This book examines the little-understood effects of the corporation income tax, a mainstay of the US federal revenue system. Although the tax legally falls on the incomes of those who own corporate stock, the actual burden is shared by everyone in the economy. Given the diffusion of the burden shown in this study, it is difficult to argue that the corporation income tax meets any well-defined goals of equity. Its effect on economic efficiency is also shown to be undesirable. It distorts the allocation of capital in our economy away from its most productive uses, causing a waste of capital; by reducing investment below an efficient level, it causes a capital shortage. Although all taxes induce some inefficiency in the economy, the corporate tax is shown to be the most inefficient of the major taxes. The value of the efficiency lost may, in fact, by equivalent to as much as half the revenue raised by the tax.