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Measuring the burden of the corporate income tax under imperfect competition

  • Li Liu

    ()

    (Centre for Business Taxation, University of Oxford)

  • Rosanne Altshuler

    ()

    (Department of Economics, Rutgers University)

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 one dollar increase in corporate tax revenue decreases wages by around 60 cents.

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File URL: http://www.sbs.ox.ac.uk/sites/default/files/Business_Taxation/Docs/Publications/Working_Papers/Series_11/WP1105.pdf
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Paper provided by Oxford University Centre for Business Taxation in its series Working Papers with number 1105.

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Date of creation: 2011
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Handle: RePEc:btx:wpaper:1105
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