The Willamette River Case: Costs 229 



Using the per cent distribution of personal income among regions 

 as weights, we can estimate the regional incidence of that part of 

 the corporate tax change which is shifted to consumers. 



Finally, we determine the regional incidence of that part of the 

 change in corporate taxes assumed to be passed on to wage and 

 salary earners. First, we observe the distribution of corporate tax 

 liabilities among major industry divisions. ^^ Next, we determine 

 the distribution of wages and salaries within each major industry 

 division by regions.^- Since we assume that the incidence of the 

 change in taxes regionally will be proportional to the regional 

 distribution of wages and salaries, we combine these coefficients to 

 obtain the distribution of the total corporate tax liability shifted 

 to wage and salary earners by major industry division and region. 

 Summing these by regions, we get the per cent distribution of this 

 change in corporate taxes by regions only.^^ \/\j^ j^qw employ these 

 coefficients as weights to that part (50 per cent) of the total change 

 in tax liabilities under Model B afEecting corporate profits which is 

 shifted to wage and salary earners (12 per cent). The results repre- 

 sent estimates of the regional incidence of 6 per cent of the total 

 change in taxes consistent with our Model B. 



As a last step in estimating the regional incidence of the 50 per 

 cent of the total change in taxes which results from a proportionate 

 change in personal income tax liability, we turn, in Table 45, to 

 considering what proportion of the total change in taxes is borne 

 by each income class and the per cent distribution of the tax 

 liability within each income class among regions, as we did in 

 Table 41. 



taxes to consumption, would affect our ultimate results by less than 1 per cent. 

 For this reason alone, while the assumption of proportionality appears unreal- 

 istic, the practical value of refining our working assumption is negligible. 



" 7 hese are: farming, 0.52 per cent; mining, 272 per cent; construction, 1.34 

 per cent; manufacturing, 61.6 per cent; wholesale and retail trade, 4.91 per 

 cent; finance, insurance, and real estate, 6.65 per cent; transportation, 13.03 

 per cent; communication and public utilities, 762 per cent; and services, 1.56 

 per cent. See U. S. Treasury Department, Statistics of Income for 1951, Part 2, 

 1955, Basic Table ii, pp. 46-51. 



■^ U. S. Department of Commeice, Surxiey of Cnrrenl Business, September 

 1955, Tal)le 4, "Major Sources of Personal Income by States and Regions," pp. 

 20-21. 



^' These arc: New England, 7.27; ^fiddlc Atlantic, 25.56; East North Central, 

 27.41; West North Central, 6.94; South Atlantic, 9.55; East South Central, 3.97; 

 West South Central, 6.36; Mountain, 2.33; and Pacific Coast, 1044. 



