> could [you] combine corporate income taxes with a law against "passing on" those taxes. Short answer: No. Tax incidence doesn't work that way. Long answer

> could [you] combine corporate income taxes with a law against "passing on" those taxes. Short answer: No. Tax incidence doesn't work that way. Long answer: The concept doesn't even make sense; a company can pay taxes in an accounting sense, but not in an economic one. Since a corporation is not a real person, every dollar of tax is by definition passed on; all we can do is try and figure out if it's being passed on to customers (via higher prices), employees (via lower wages), or investors (via lower returns). But, obviously, every dollar going into the treasury is a dollar not going into some real person's pocket. Unless we start letting companies cover their tax bills by printing money. :) Of course, what you probably meant was "a law against passing on those taxes to specific groups"; you're looking for a way to force the tax to be passed on to investors and not employees (or whatever). In which case the answer is... ...still no. Because tax incidence (which is the technical name for this) isn't just a matter of deciding how to divy up a tax bill. If investors face lower returns, they'll invest less money (both because they'll have less money to invest, because they'll decide to invest in other areas where taxes are lower, and because they'll decide to consume more and invest less). Investment, at an industry level, is strongly correlated with productivity (eg, build a new factory and your employees can make more widgets), and productivity (again at an industry level) is strongly correlated with wages. Or in other words: If you tax investment in an industry heavily, you'll end up with decrepit plant and poorly paid workers. That's how taxes on investment end up being born by workers, not by some sort of conscious decision to cut wages to free up more money for dividends. And no law is going to stop it either. Is a union supposed to bargain with a company as if there were other employers in the industry paying high wages, even though there aren't, because there's been industry-wide under-investment for the past 10 years? Does your law force investors to invest as if they were receiving dividends, even though they're not? Does this law apply to foreign investors? Are you going to try and order round some massive Middle Eastern sovereign wealth fund and tell them how much they would have invested without the tax, and send them an invoice for the balance? In short: The issue has been well studied. It might work in a world without trade, globalization, and the free-ish movement of labour, capital, and goods. It doesn't work in our world.