Advanced Search
MyIDEAS: Login to save this article or follow this journal

Measuring The Burden Of The Corporate Income Tax Under Imperfect Competition

Contents:

Author Info

  • Liu, Li
  • Altshuler, Rosanne

Abstract

We model and estimate the incidence of the corporate income tax under imperfect competition. Identification comes from variation in effective marginal tax rates in the United States across industries and time. Our empirical results suggest that labor bears a significant portion of the burden of the corporate income tax. In addition, we find that the elasticity of wages with respect to the corporate marginal effective tax rate increases with industry concentration. Over all industries, our estimates suggest that a $1.00 increase in corporate tax revenue decreases wages by approximately $0.60.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.ntanet.org/NTJ/66/1/ntj-v66n01p215-37-measuring-burden-corporate-income.pdf
Download Restriction: no

File URL: http://www.ntanet.org/NTJ/66/1/ntj-v66n01p215-37-measuring-burden-corporate-income.html
Download Restriction: no

Bibliographic Info

Article provided by National Tax Association in its journal National Tax Journal.

Volume (Year): 66 (2013)
Issue (Month): 1 (March)
Pages: 215-37

as in new window
Handle: RePEc:ntj:journl:v:66:y:2013:i:1:p:215-37

Contact details of provider:
Postal: 725 15th St. NW #600. Washington, D.C. 20005-2109
Phone: (202)737-3325
Fax: (202) 737-7308
Email:
Web page: http://www.ntanet.org/
More information through EDIRC

Related research

Keywords:

Other versions of this item:

Find related papers by JEL classification:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Devereux, Michael P & Lockwood, Ben & Redoano, Michela, 2002. "Do Countries Compete Over Corporate Tax Rates?," The Warwick Economics Research Paper Series (TWERPS), University of Warwick, Department of Economics 642, University of Warwick, Department of Economics.
  2. Rosanne Altshuler & Harry Grubert, 2004. "Taxpayer Responses to Competitive Tax Policies and Tax Policy Responses to Competitive Taxpayers: Recent Evidence," Departmental Working Papers, Rutgers University, Department of Economics 200406, Rutgers University, Department of Economics.
  3. Josh Ederington & Arik Levinson & Jenny Minier, 2003. "Footloose and Pollution-Free," NBER Working Papers 9718, National Bureau of Economic Research, Inc.
  4. Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, American Economic Association, vol. 67(3), pages 297-308, June.
  5. William T. Dickens & Lawrence F. Katz, 1986. "Interindustry Wage Differences and Industry Characteristics," NBER Working Papers 2014, National Bureau of Economic Research, Inc.
  6. Wiji Arulampalam & Michael P Devereux & Giorgia Maffini, 2009. "The Direct Incidence of Corporate Income Tax on Wages," Working Papers, Oxford University Centre for Business Taxation 0917, Oxford University Centre for Business Taxation.
  7. Nadja Dwenger & Pia Rattenhuber & Viktor Steiner, 2011. "Sharing the burden: Empirical evidence on corporate tax incidence," Working Papers, Max Planck Institute for Tax Law and Public Finance sharing_the_burden, Max Planck Institute for Tax Law and Public Finance.
  8. Dwenger, Nadja & Steiner, Viktor, 2008. "Effective profit taxation and the elasticity of the corporate income tax base: Evidence from German corporate tax return data," arqus Discussion Papers in Quantitative Tax Research, arqus - Arbeitskreis Quantitative Steuerlehre 57, arqus - Arbeitskreis Quantitative Steuerlehre.
  9. Devereux, Michael & Lockwood, Ben & Redoano, Michela, 2004. "Horizontal And Vertical Indirect Tax Competition : Theory And Some Evidence From The Usa," The Warwick Economics Research Paper Series (TWERPS), University of Warwick, Department of Economics 704, University of Warwick, Department of Economics.
  10. R. Alison Felix & James R. Hines, Jr., 2009. "Corporate Taxes and Union Wages in the United States," NBER Working Papers 15263, National Bureau of Economic Research, Inc.
  11. George Symeonidis, 2008. "The Effect of Competition on Wages and Productivity: Evidence from the United Kingdom," The Review of Economics and Statistics, MIT Press, vol. 90(1), pages 134-146, February.
  12. Clemens Fuest & Andreas Peichl & Sebastian Siegloch, 2012. "Which Workers Bear the Burden of Corporate Taxation and Which Firms Can Pass It On? Micro Evidence from Germany," Working Papers, Oxford University Centre for Business Taxation 1216, Oxford University Centre for Business Taxation.
  13. Gravelle, Jennifer, 2013. "Corporate Tax Incidence: Review Of General Equilibrium Estimates And Analysis," National Tax Journal, National Tax Association, National Tax Association, vol. 66(1), pages 185-214, March.
  14. Mutti, John & Grubert, Harry, 1985. "The taxation of capital income in an open economy: the importance of resident-nonresident tax treatment," Journal of Public Economics, Elsevier, Elsevier, vol. 27(3), pages 291-309, August.
  15. Dwenger, Nadja & Steiner, Viktor, 2012. "Profit Taxation And The Elasticity Of The Corporate Income Tax Base: Evidence From German Corporate Tax Return Data," National Tax Journal, National Tax Association, National Tax Association, vol. 65(1), pages 118-50, March.
  16. William C. Randolph, 2006. "International Burdens of the Corporate Income Tax: Working Paper 2006-09," Working Papers, Congressional Budget Office 18067, Congressional Budget Office.
  17. Davidson, Carl & Martin, Lawrence W, 1985. "General Equilibrium Tax Incidence under Imperfect Competition: A Quantity-setting Supergame Analysis," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 93(6), pages 1212-23, December.
  18. Helwege, Jean, 1992. "Sectoral Shifts and Interindustry Wage Differentials," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 10(1), pages 55-84, January.
  19. Alan J. Auerbach, 2005. "Who Bears the Corporate Tax? A review of What We Know," NBER Working Papers 11686, National Bureau of Economic Research, Inc.
  20. Esteller-More, Alex & Sole-Olle, Albert, 2001. "Vertical income tax externalities and fiscal interdependence: evidence from the US," Regional Science and Urban Economics, Elsevier, Elsevier, vol. 31(2-3), pages 247-272, April.
  21. Gravelle Jane G & Smetters Kent A., 2006. "Does the Open Economy Assumption Really Mean That Labor Bears the Burden of a Capital Income Tax?," The B.E. Journal of Economic Analysis & Policy, De Gruyter, De Gruyter, vol. 6(1), pages 1-44, August.
  22. Timothy J. Besley & Harvey S. Rosen, 1999. "Vertical Externalities in Tax Setting: Evidence from Gasoline and Cigarettes," NBER Working Papers 6517, National Bureau of Economic Research, Inc.
  23. Jennifer C. Gravelle, 2010. "Corporate Tax Incidence: Review of General Equilibrium Estimates and Analysis: Working Paper 2010-03," Working Papers, Congressional Budget Office 21486, Congressional Budget Office.
  24. Joseph Gyourko & Joseph S. Tracy, 1986. "The Importance of Local Fiscal Conditions in Analyzing Local Labor Markets," NBER Working Papers 2040, National Bureau of Economic Research, Inc.
  25. Jane G. Gravelle, 1994. "The Economic Effects of Taxing Capital Income," MIT Press Books, The MIT Press, The MIT Press, edition 1, volume 1, number 0262071584, December.
  26. R. Alison Felix, 2009. "Do state corporate income taxes reduce wages?," Economic Review, Federal Reserve Bank of Kansas City, Federal Reserve Bank of Kansas City, issue Q II, pages 77-102.
  27. R. Alison Felix, 2007. "Passing the burden: corporate tax incidence in open economies," Regional Research Working Paper, Federal Reserve Bank of Kansas City RRWP 07-01, Federal Reserve Bank of Kansas City.
  28. Arnold C. Harberger, 1962. "The Incidence of the Corporation Income Tax," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 70, pages 215.
  29. Rosanne Altshuler & Timothy J. Goodspeed, 2002. "Follow the Leader? Evidence on European and U.S. Tax Competition," Departmental Working Papers, Rutgers University, Department of Economics 200226, Rutgers University, Department of Economics.
  30. Hannes Winner, 2005. "Has Tax Competition Emerged in OECD Countries? Evidence from Panel Data," International Tax and Public Finance, Springer, Springer, vol. 12(5), pages 667-687, September.
  31. Clausing, Kimberly A., 2013. "Who Pays The Corporate Tax In A Global Economy?," National Tax Journal, National Tax Association, National Tax Association, vol. 66(1), pages 151-84, March.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Peichl, Andreas & Fuest, Clemens & Siegloch, Sebastian, 2013. "Wage Incidence of Local Corporate Taxation - Micro Evidence from Germany," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order, Verein für Socialpolitik / German Economic Association 79916, Verein für Socialpolitik / German Economic Association.
  2. Clemens Fuest & Andreas Peichl & Sebastian Siegloch, 2013. "Do Higher Corporate Taxes Reduce Wages? Micro Evidence from Germany," CESifo Working Paper Series, CESifo Group Munich 4247, CESifo Group Munich.
  3. Nadja Dwenger & Pia Rattenhuber & Viktor Steiner, 2011. "Sharing the burden: Empirical evidence on corporate tax incidence," Working Papers, Max Planck Institute for Tax Law and Public Finance sharing_the_burden, Max Planck Institute for Tax Law and Public Finance.
  4. Clemens Fuest & Andreas Peichl & Sebastian Siegloch, 2012. "Which Workers Bear the Burden of Corporate Taxation and Which Firms Can Pass It On? Micro Evidence from Germany," Working Papers, Oxford University Centre for Business Taxation 1216, Oxford University Centre for Business Taxation.
  5. Timothy J. Goodspeed, 2012. "The Incidence of Bank Regulations and Taxes on Wages: Evidence from US States," CESifo Working Paper Series, CESifo Group Munich 4026, CESifo Group Munich.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:ntj:journl:v:66:y:2013:i:1:p:215-37. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Charmaine Wright).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.