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Taxes, incorporation, and productivity

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  • Robert J. Barro

    (American Enterprise Institute)

  • 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%.

Suggested Citation

  • Robert J. Barro & Brian Wheaton, 2019. "Taxes, incorporation, and productivity," AEI Economics Working Papers 1006902, American Enterprise Institute.
    • Handle: RePEc:aei:rpaper:1006902
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    Cited by:

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    5. Tan, Eugene & Zeida, Teegawende H., 2024. "Consumer demand and credit supply as barriers to growth for Black-owned startups," Journal of Monetary Economics, Elsevier, vol. 143(C).

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    Keywords

    corporate taxes; Corporate america;

    JEL classification:

    • A - General Economics and Teaching

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