Sharing the Burden? Empirical Evidence on Corporate Tax Incidence

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in Abstract:This study assesses the burden of capital income tax passed onto labor through wage bargaining over economic rents, using estimations based on a unique pseudo-panel data set from Germany for the period 1998 to 2006. Tax return data cover the universe of corporations subject to corporate income tax, and labor market variables reflect the full record of employees covered by Social Security. We find that wage bargaining after a reduction in tax rates does not increase the wage bill if employment effects neglected by previous empirical studies are taken into account. Any increase in the total wage bill by higher wage rates set is equally compensated for by lower levels of employment. If adjustments in employment due to the increased user cost of capital are taken into account, a cut in corporate income taxes by 1 euro increases the wage bill by 0.47 euro. The identification of these effects comes from variation in the firm-specific average corporate tax rate across firms and over time resulting from two substantial tax reforms. The endogeneity of the firmspecific tax rate is controlled for by an instrumental variable approach. The instrument for the observed average tax rate is the counterfactual tax rate that a corporation would have faced in a particular period, had there been no endogenous change of its tax base, constructed using a detailed microsimulation model. JEL Classification: H22, H25, J21, J31, H32

Wage response to corporate income taxes: A meta‐regression analysis

“…Most empirical studies corroborate evidence of labor bearing a substantial share of the CIT, since their estimates suggest a tax incidence of 30% -100% (e.g., Desai et al, 2007;Felix, 2007;Arulampalam et al, 2012;Suárez Serrato & Zidar, 2016;Fuest et al, 2018;Dwenger et al, 2019). A first stream of studies addresses the indirect tax incidence effect through capital reallocation across countries or states over time, that is, the open-economy general equilibrium mechanism.…”

“…1 Many studies point to this, for example, Gentry (2007), Harris (2009), Dwenger et al (2019). 2 Meta-analysis is a statistical tool for averaging estimates from a comparable strand of literature (Stanley & Doucouliagos, 2012).…”

The Incidence of the Corporate Income Tax on Wages: Evidence from Canadian Provinces

“…This translates into a 60-cent reduction in aggregate wages associated with a $1 increase in corporate tax liability. Dwenger et al (2011) use industry-and region-level data in Germany to identify the direct effect of corporate taxes. They use average tax rates (the average share of pre-tax profits paid in taxes), which they instrument for using calculations from a micro-simulation model.…”

“…Again, the theoretical results can be sensitive to various modelling assumptions and the emphasis has been on empirically identifying the so-called direct effect. Studies in this vein include Felix and Hines (2009) for the U.S., Dwenger et al (2011) and Fuest et al (2015) for Germany and Arulampalam et al (2012) for a cross-section of European countries. They tend to find some empirical support for the direct transmission mechanism, though estimates of the size of the effect vary.…”

Die relative Steuerbelastung mittelständischer Kapitalgesellschaften: Evidenz von handelsbilanziellen Mikrodaten

“…an zu geringen Vorauszahlungen aufgrund des Konjunkturaufschwungs in diesen Jahren und an Erstattungen durch zu hohe Vorauszahlungen in den konjunkturschwachen Jahren davor liegen. Das Problem der sehr niedrigen geschätzten Last der kleinen Unternehmen im Jahr 1998 bei der vollen Stichprobe tritt nur innerhalb des Modells (3) ein größerer Teil der Unternehmenssteuern auf Lohnempfänger überwälzt wird (Arulampalam et al 2012;Bauer et al 2016;Dwenger et al 2013;Fuest et al 2015;Harberger 2008;Sinn 1985 26 Die Sonderveröffentlichung berichtet für die Jahre 1997 bis 2013 für kleine und mittlere KapG zusammen als auch für große KapG die Steuern vom Einkommen und Ertrag sowie das Jahresergebnis vor Gewinnsteuern. Hieraus haben wir analog zu unserem Vorgehen die Steuerlastquoten gebildet und verglichen.…”