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Measuring the burden of the corporate income tax under imperfect competition

Author

Listed:
  • Li Liu

    (Centre for Business Taxation, University of Oxford)

  • Rosanne Altshuler

    (Department of Economics, Rutgers University)

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

Suggested Citation

  • Li Liu & Rosanne Altshuler, 2011. "Measuring the burden of the corporate income tax under imperfect competition," Working Papers 1105, Oxford University Centre for Business Taxation.
  • Handle: RePEc:btx:wpaper:1105
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    References listed on IDEAS

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    More about this item

    Keywords

    Tax incidence; Wage determination; Corporate income tax; Market structure;
    All these keywords.

    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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