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Do Large Companies Have Lower Effective Corporate Tax Rates? A European Survey

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  • Gaëtan Nicodème

Abstract

The current debate in corporate taxation is focusing on leveling the tax playing field within the European Union for companies operating across-countries. However, tax burdens could also vary with the size of companies within the same country, raising the question whether large companies pay their share of the burden. This paper uses firm-level data for 21 European countries between 1992 and 2004. The paper finds a robust negative correlation between the number of employees and the effective tax burden of companies. This result tends to validate theories arguing that large companies may enjoy a lower tax burden. As a caveat, using total assets as size variable produces a positive relationship. This relationship is however less robust and less economically significant.

Suggested Citation

  • Gaëtan Nicodème, 2007. "Do Large Companies Have Lower Effective Corporate Tax Rates? A European Survey," Working Papers CEB 07-001.RS, ULB -- Universite Libre de Bruxelles.
  • Handle: RePEc:sol:wpaper:07-001
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    Citations

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    Cited by:

    1. Jan Svitlík, 2015. "ETR Development and Analysis: Case from the Czech Republic," European Financial and Accounting Journal, University of Economics, Prague, vol. 2015(4), pages 05-18.
    2. Marcin Piatkowski & Mariusz Jarmuzek, 2008. "Zero Corporate Income Tax in Moldova; Tax Competition and Its Implications for Eastern Europe," IMF Working Papers 08/203, International Monetary Fund.
    3. European Commission, 2012. "Tax reforms in EU Member States - Tax policy challenges for economic growth and fiscal sustainability – 2012 Report," Taxation Papers 34, Directorate General Taxation and Customs Union, European Commission.

    More about this item

    Keywords

    Corporate taxation; Effective tax rates; political power; political cost.;

    JEL classification:

    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence

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