A corporation can be defined primarily as limited liability, where its owners, the shareholders, are not required to use their personal assets to pay the debts of a bankrupt company; therefore the owners and the company are separate legal entities. Second, a company has delegated management where decisions about how to run the company are left to managers who are separate from the owners. Finally, the owners of the company can easily transfer their ownership stake through exchanges in the financial markets. The tax on a company's profits which is the difference between the company's gross income and its business costs is therefore called corporation tax. Now it may seem that since the tax is on the profits of the company and therefore the company has to pay the tax, however there are many individuals such as employees, consumers and owners on whom the corporate tax can also be passed on. consider Harberger's general equilibrium model, which analyzes the incidence of corporate tax by dividing the US economy into two sectors, the corporate and the non-corporate, which produce goods hypothesis, that is, that there is full employment and, after the tax, if initial prices continue to prevail, the government would simply counterbalance the reduction in private spending on the two goods. There is also free factor mobility between sectors, competitive markets and constant returns to scale, as well as a closed economy and free factor mobility between sectors. It is also assumed that the redistribution of income among consumers will not change demand patterns. Harberger's analysis shows that there are several variables that... middle of paper...us allow firms returns to recover to an equilibrium point in the long run where returns in the two sectors are at a lower but equal rate. If Harbenger's findings, where capital owners bear the entire or nearly entire burden of the tax, are to be believed, then there should be cause for concern for countries that charge high levels of corporate tax. This is because there is a global trend towards ever higher levels of capital mobility. Therefore, capital holders would be able to somehow avoid the tax burden by avoiding countries with high tax rates on capital and thus limiting the flow of capital to those countries. However, given the large number of variables that need to be taken into account when determining the incidence of corporate tax, it is not yet entirely clear who supports the incidence of corporate tax.