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Taxes, Incorporation, and Productivity

In: Tax Policy and the Economy, Volume 34

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  • Robert J. Barro
  • Brian Wheaton

Abstract

Long-difference regressions for 1968-2013 show that a higher tax wedge reduces the C-corporate share of net capital stocks, equity (book value), gross assets, and positive net income, as well as the corporate share of gross investment. The C-corporate shares also exhibit downward trends, likely reflecting underlying legal changes. We infer from the quantitative findings that the downward movement in the tax wedge since 1968 has expanded economy-wide productivity by about 4%.
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Suggested Citation

  • Robert J. Barro & Brian Wheaton, 2019. "Taxes, Incorporation, and Productivity," NBER Chapters, in: Tax Policy and the Economy, Volume 34, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberch:14345
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    Cited by:

    1. Bilicka, Katarzyna & Raei, Sepideh, 2023. "Output distortions and the choice of legal form of organization," Economic Modelling, Elsevier, vol. 119(C).
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    4. Francesco Furno, 2021. "The Macroeconomic Effects of Corporate Tax Reforms," Papers 2111.12799, arXiv.org.

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    More about this item

    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General

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