Passing It On: The Incidence of the Corporate Income Tax under Imperfect Competition

Liu, Li (2011) Passing It On: The Incidence of the Corporate Income Tax under Imperfect Competition. In: International Institute of Public Finance (IIPF) Annual Conference, 07/08/2011-11/08/2011, University of Michigan, USA.

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Abstract

We model and estimate the incidence of the corporate income tax under imperfect competition. Identification comes from variation in the effective marginal tax rates across industry and time. Our empirical results suggest that labor shares the burden of corporate taxes. A ten percentage increase in the tax rates decreses the average wage rate by 0.28-0.38 percent. Consistent with our theoretical prediction, the elasticity of wage with respect to the tax rates increases with the industry concentration. Labor bears at least 42 percent of the burden of corporate income taxes.

Item Type: Conference or Workshop Item (Paper)
Keywords: Tax incidence, Wage determination, Corporate income tax, Market structure
Subject(s): Taxation
Centre: Oxford University Centre for Business Taxation
Date Deposited: 20 Aug 2012 10:24
Last Modified: 23 Oct 2015 14:07
URI: http://eureka.sbs.ox.ac.uk/id/eprint/4092

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