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Corporate Taxes and Economic Inequality: A Credit Channel

Author

Listed:
  • Delis, Manthos
  • Galariotis, Emilios
  • Iosifidi, Maria

Abstract

Corporate taxation can have redistributive effects on income and wealth. We hypothesize and empirically establish such an effect working via bank credit. Using a unique sample of majority-owned firms that apply for credit, we show that after a decrease in corporate tax rates the relative-ly poor get easier access to credit. However, this policy also considerably increases loan amounts and decreases loan spreads for the relatively rich. Ultimately, reducing the corporate tax rate pre-dominantly increases the future income and wealth of relatively rich business owners.

Suggested Citation

  • Delis, Manthos & Galariotis, Emilios & Iosifidi, Maria, 2023. "Corporate Taxes and Economic Inequality: A Credit Channel," MPRA Paper 116396, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:116396
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies

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