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Corporate tax avoidance and sales: micro evidence and aggregate implications

Author

Listed:
  • Julien Martin

    (CEPR - Center for Economic Policy Research - CEPR)

  • Mathieu Parenti

    (ECARES - European Center for Advanced Research in Economics and Statistics - ULB - Université libre de Bruxelles, CEPR - Center for Economic Policy Research - CEPR)

  • Farid Toubal

    (CREST - Centre de Recherche en Économie et Statistique - ENSAI - Ecole Nationale de la Statistique et de l'Analyse de l'Information [Bruz] - X - École polytechnique - ENSAE Paris - École Nationale de la Statistique et de l'Administration Économique - CNRS - Centre National de la Recherche Scientifique, CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, CEPII - Centre d'Etudes Prospectives et d'Informations Internationales - Centre d'analyse stratégique, CEPR - Center for Economic Policy Research - CEPR, LEDa - Laboratoire d'Economie de Dauphine - IRD - Institut de Recherche pour le Développement - Université Paris Dauphine-PSL - PSL - Université Paris sciences et lettres - CNRS - Centre National de la Recherche Scientifique)

Abstract

This paper investigates the influence of corporate tax avoidance (CTA) on firm-level sales, and its aggregate implications. CTA gives a competitive advantage to avoiding firms, which affects the distribution of sales in the economy. We find a causal impact of CTA on sales in US firm-level data. CTA increased more among the largest firms, which has reinforced their dominant position. A quantitative exercise reveals that the strength of CTA in shaping changes in the distribution of sales varies across industries. In industries like computers or chemicals, CTA can explain up to 10%-30% of the increase in concentration from 1994 to 2017. Further analysis shows the impact.

Suggested Citation

  • Julien Martin & Mathieu Parenti & Farid Toubal, 2024. "Corporate tax avoidance and sales: micro evidence and aggregate implications," Working Papers hal-04429928, HAL.
    • Handle: RePEc:hal:wpaper:hal-04429928
    as

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