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Measuring the Burden of the Corporate Income Tax Under Imperfect Competition

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  • 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.

Suggested Citation

  • Liu, Li & Altshuler, Rosanne, 2013. "Measuring the Burden of the Corporate Income Tax Under Imperfect Competition," National Tax Journal, National Tax Association;National Tax Journal, vol. 66(1), pages 215-237, March.
  • Handle: RePEc:ntj:journl:v:66:y:2013:i:1:p:215-37
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    Cited by:

    1. Clemens Fuest & Andreas Peichl & Sebastian Siegloch, 2018. "Do Higher Corporate Taxes Reduce Wages? Micro Evidence from Germany," American Economic Review, American Economic Association, vol. 108(2), pages 393-418, February.
    2. Timothy J. Goodspeed, 2012. "The Incidence of Bank Regulations and Taxes on Wages: Evidence from US States," CESifo Working Paper Series 4026, CESifo Group Munich.
    3. Fuest, Clemens & Peichl, Andreas & Siegloch, Sebastian, 2015. "Do Higher Corporate Taxes Reduce Wages?," IZA Discussion Papers 9606, Institute for the Study of Labor (IZA).
    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 1216, Oxford University Centre for Business Taxation.
    5. Dwenger, Nadja & Rattenhuber, Pia & Steiner, Viktor, 2011. "Sharing the burden: Empirical evidence on corporate tax incidence," Discussion Papers 2011/19, Free University Berlin, School of Business & Economics.
    6. Clemens Fuest & Li Liu, 2015. "Does Ownership Affect the Impact of Taxes on Firm Behavior? Evidence from China," CESifo Working Paper Series 5316, CESifo Group Munich.
    7. Thomas K. Bauer & Tanja Kasten & Lars-H. R. Siemers, 2017. "Business Taxation and Wages: Redistribution and Asymmetric Effects," MAGKS Papers on Economics 201732, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    8. 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 79916, Verein für Socialpolitik / German Economic Association.
    9. Bird, Richard M. & Zolt, Eric M., 2015. "Fiscal Contracting in Latin America," World Development, Elsevier, vol. 67(C), pages 323-335.
    10. Clément Carbonnier & Gwenaële Rot & Clément Malgouyres, 2016. "Evaluation interdisciplinaire des impacts du CICE en matière de compétitivité internationale, d'investissement, d'emploi, de résultat net des entreprises et de salaires," Sciences Po publications info:hdl:2441/4v8c8tnfgu8, Sciences Po.
    11. Hernán Rincón-Castro & Martha Elena Delgado-Rojas, 2018. "¿Cuánto tributan efectivamente el consumo, el trabajo y el capital en Colombia?," Borradores de Economia 1041, Banco de la Republica de Colombia.
    12. Siegloch, Sebastian, 2014. "Employment Effects of Local Business Taxes," Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100325, Verein für Socialpolitik / German Economic Association.
    13. repec:voj:journl:v:63:y:2016:i:5:p:525-540 is not listed on IDEAS

    More about this item

    JEL classification:

    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household

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