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Sharing the Burden? Empirical Evidence on Corporate Tax Incidence

Author

Listed:
  • Dwenger Nadja

    (University of Hohenheim,Stuttgart, Germany)

  • Steiner Viktor

    (Freie Universität Berlin,Berlin, Germany)

  • Rattenhuber Pia

    (Organisation for Economic Co-operation and Development (OECD),Paris, France)

Abstract

This study investigates the direct incidence of the corporate income tax (CIT) through wage bargaining, using an industry-region level panel dataset on all corporations in Germany over the period 1998-2006. For the first time we account for employment effects which result from tax-induced wage changes. Workers share in reductions of the CIT burden; yet, the net effect of wage bargaining on the corporate wage bill, after an exogenous €1 decrease in the CIT burden, is as little as 19-28 cents. This is about half of the effect obtained in prior literature focussing on wages alone.

Suggested Citation

  • Dwenger Nadja & Steiner Viktor & Rattenhuber Pia, 2019. "Sharing the Burden? Empirical Evidence on Corporate Tax Incidence," German Economic Review, De Gruyter, vol. 20(4), pages 107-140, December.
    • Handle: RePEc:bpj:germec:v:20:y:2019:i:4:p:e107-e140
    DOI: 10.1111/geer.12157
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    More about this item

    Keywords

    Tax incidence; wage determination; corporate income taxation; tax return data;
    All these keywords.

    JEL classification:

    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm

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