Article

The Direct Incidence of Corporate Income Tax on Wages

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Abstract

We examine how far taxes on corporate income are directly shifted onto the workforce. We use data on 55,082 companies located in nine European countries over the period 1996-2003. We identify this direct shifting through cross-company variation in tax liabilities, conditional on value added per employee. Our central estimate is that $1 of additional tax reduces wages by 92 cents in the long run. The incidence of a $1 fall in value added is smaller, consistent with our wage bargaining model. We find only weak evidence of a difference in the effective incidence of taxes paid by multinational companies.

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... Most empirical studies corroborate evidence of labor bearing a substantial share of the CIT, since estimates suggest a tax incidence of 30-100% (e.g., Felix 2007;Arulampalam et al. 2012;Hassett & Mathur 2015;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. ...
... J. G. Gravelle & Hungerford (2007) note that the results of Hassett & Mathur (2006) are sensitive to alternative exchange rate conversions and the lag structure. More recent versions of the paper integrate spatial effects by controlling for tax rates in neighboring countries and report smaller elasticity focuses on the direct tax incidence (e.g., Carroll 2009;Arulampalam et al. 2012;Liu & Altshuler 2013; Aus dem Moore 2014). Extending the general wage bargaining model of McDonald & Solow (1981), Arulampalam et al. (2012) assume that firms and their employees collectively bargain over the share of the firm's economic after-tax profit that is paid out as wages. ...
... More recent versions of the paper integrate spatial effects by controlling for tax rates in neighboring countries and report smaller elasticity focuses on the direct tax incidence (e.g., Carroll 2009;Arulampalam et al. 2012;Liu & Altshuler 2013; Aus dem Moore 2014). Extending the general wage bargaining model of McDonald & Solow (1981), Arulampalam et al. (2012) assume that firms and their employees collectively bargain over the share of the firm's economic after-tax profit that is paid out as wages. Using firm-level data on 55,082 European firms from nine countries for the years 1996-2003, they estimate that a 1% increase in the CIT payment per worker results in a decrease in wages of 0.09% in the long run. ...
... The authors apply regressions of five-year average manufacturing hourly wages on three measures of the CIT burden (i.e., statutory tax rate, effective marginal and average tax rate) and estimate an extremely large wage elasticity, as their findings imply that a 1% increase in the CIT rate is associated with a decrease in hourly wages of roughly 1%. 1 An emerging second strand of literature focuses on the 'direct' incidence of corporate taxes on wages. Arulampalam, Devereux and Maffini (2012) argue that companies and their employees collectively bargain over the firms' economic after-tax profits that are paid out in wages. The empirical strategy to measure the impact of corporate taxes on wages through this rent-sharing mechanism is by controlling for labor productivity (e.g., value-added of workers). ...
... However, the majority of empirical studies corroborates evidence for labor bearing a substantial share of the CIT, since estimates suggest a tax incidence of 30-100% on employees (e.g., Hassett & Mathur 2006;Felix 2007;Arulampalam, Devereux & Maffini 2012;Dwenger, Rattenhuber & Steiner 2017;Fuest, Peichl & Siegloch 2018). Thus, the precise magnitude of the CIT incidence still remains controversial (many studies point to this, see e.g., Gentry and College 2007, p. 13;Harris 2009, p. 2;Dwenger, Rattenhuber & Steiner 2017, p. 1). ...
... This depresses labor productivity and wages in the high-tax country since labor is far less mobile than capital ('indirect' channel). In contrast, Arulampalam, Devereux and Maffini (2012) and Riedel (2011) argue that a higher CIT rate directly lowers the firms' economic after-tax profits over which the firm and its employees bargain (rent-sharing mechanism or 'direct' channel), while the final corporate tax incidence is driven by the bargaining power and outside options of both parties. According to Arulampalam, Devereux and Maffini (2012), an empirical strategy to measure the impact of corporate taxes on wages through wage bargaining is by controlling for labor productivity in order to account for the general equilibrium effect. ...
Preprint
We apply meta-regression analysis to quantitatively review the growing empirical tax incidence literature that indicates a substantial shift of the corporate income tax burden on employees.
... A more recent body of work has focused on the role of the domestic labor market in determining the incidence of corporate taxation. Papers by Alison Felix and James R Hines Jr. (2009), using variation across states in the U.S., and Arulampalam, Devereux and Maffini (2012), using variation across firms for a set of European countries, use wage bargaining models to estimate the incidence of corporate taxation and provide empirical evidence of the direct effect of taxation of corporate income on employee earnings. Fuest, Peichl and Siegloch (2018) show how a variety of models where firms have wage setting power would imply direct effects of corporate taxation on wages and estimate the effect of corporate tax changes on earnings in firms across districts in Germany. ...
... Additionally, the variation across state with different prevailing unemployment rates presented in Section 1.5 suggests that the pass-through parameter may not be structural but instead may depend on the prevailing macro labor market conditions in addition to prevailing labor market institutions. Finally, the parameters estimated in each of these studies is somewhat different, Fuest, Peichl and Siegloch (2018) and Juan Carlos Suárez Serrato and Owen Zidar (2016) estimate responses to uniform changes in sub-national tax rates, Arulampalam, Devereux and Maffini (2012) estimates responses to national tax changes, and I estimate responses to a differential tax rate changes within jurisdiction. Different estimates may be more appropriate for interpreting different tax policies. ...
Thesis
This dissertation contains three essays that leverage novel administrative datasets to examine the relationship between public policies and the distribution of income. Chapter 1 analyzes the role of the firm in mediating responses to changes in personal income tax rates. I create a new linked owner-firm-employee dataset to study how a recent increase in the top marginal tax rate faced by pass-through business owners affected the compensation of employees in the firms they own. I find that employees in firms whose owners experienced a larger tax increase reported lower relative earnings following the tax reform. Approximately 18 cents per dollar of new business tax liability was passed through to employee earnings. The primary burden was borne by employees who remained with the firm following the tax change, and not a result of changes to workforce composition. I show that the ability to pass tax burdens onto employees depends on underlying features of the labor market, underscoring the interaction between tax policies and labor market institutions. The results provide some of the first direct evidence of pass-through from changes in the top marginal personal income tax to workers in lower tax brackets, implying that the incidence of the personal income tax is not fully borne by those directly subject to the tax. I examine the implications of this result for the equity and efficiency of personal income taxation. Chapter 2 uses unique administrative microdata, linking individual income reports with reports on foreign asset holdings, to estimate taxpayer responses to recent initiatives by the U.S. government to curb the use of offshore accounts to evade taxes. We find that enforcement caused approximately 50,000 individuals to disclose offshore accounts with a combined value of around $100 billion. Most disclosures happened outside voluntary disclosure programs, by individuals who never admitted prior noncompliance. Newly disclosed accounts were concentrated in countries often characterized as tax havens. Enforcement-driven disclosures increased annual reported capital income by $2-$4 billion, corresponding to $0.6-$1.2 billion in additional tax revenue. The findings show that enforcement initiatives can affect tax compliance even among not directly targeted groups of taxpayers. Chapter 3 explores the recent trend in the U.S. workforce towards independent contractors (ICs) and away from employees. The essay establishes new criteria to identify ICs using administrative data from tax filings and finds that the share of the workforce with some IC income grew by 1.4 percentage points, or 20%, from 2001 to 2015. The largest share of ICs is in the top quartile of the income distribution and uses IC earnings as supplemental labor income. Yet, the fastest growing type of IC uses contractor earnings as the primary household income source, over half of which are in the bottom quartile of the income distribution. These trends are particularly pronounced among female ICs, who have contributed over 60% of the total growth in IC labor over the period. Additionally, we find that the share of firms using IC labor increased by 20 percent, that the largest relative increase has been among small firms, and that the growth is spread across industries. These trends imply that the long-run growth in IC labor cannot solely be attributed to side jobs, or to the rise of a few online platform firms, but may represent a more structural shift in the labor market, particularly for women.
... Harberger (1962) argued that income tax only strikes the earnings of capital, in other words, shareholders bear the tax incidence by themselves. Recent studies suggested that employees could also bear the corporate income tax incidence (Arulampalam et al., 2012;Azémar and Hubbard, 2015). In this study, we want to further explore who bears the costs or reaps the benefits of the change in tax avoidance after the implementation of mandatory CSR disclosure. ...
... Using a specific model, several studies estimated workers' share of tax incidence. For example, Desai et al. (2007) predicted a share of 45-75 percent on labor while Arulampalam et al. (2012) predicted a share of 49 percent. Hassett and Mathur (2015) used a spatial model and find that workers bear a large proportion of the corporate tax burden through lower wages. ...
Article
Full-text available
The implementation of China’s mandatory corporate social responsibility (CSR) disclosure in 2008 provides us with a natural experiment setting. In this paper, we examine the effects of mandatory CSR disclosure on the levels of firms’ tax avoidance and tax incidence. By using a difference-in-differences model, we predict and find that mandatory CSR reporting firms tend to be less tax aggressive. Then we test who bears the burden of the effective tax rate increase. It shows that the increase of effective tax rate causes a drop in firm output and imposes a tax burden on the firms’ consumers. The reduction in output also reduces demand for the firms’ inputs and after-tax returns, passing tax burden to suppliers, other stakeholders, employees, and shareholders. In contrast, there is no evidence that the decrease of firms’ tax avoidance activities influences the tax incidence of governments, banks, and other creditors. These findings provide evidence that mandatory CSR disclosure changes firm tax planning activities and indeed influences the costs of various stakeholders.
... Other studies have found labor to bear a high share of the corporate tax burden [39]. For the effect of the corporate income tax burden, recently, many researchers have begun to exploit cross-country variation to calculate the impact of corporate taxes on wages [3] [4] [5]. As Auerbach (2006) points out, a tax in an industry with restricted output due to imperfect competition will be more distortionary than one in a competitive industry since it will worsen the original distortion to output [6]. ...
... Why? Firstly, due to the block coefficient in the model (1), (2), (3) is a positive sign, meanwhile sign of the block coefficient and slopes in the model (4) is consistent with economic rules. Secondly, R 2 and F-statistic in the model (1), (2), (3) are smaller than the model (4). ...
Article
Full-text available
The corporate income tax is one of the important taxes in tax system of the countries. Its burden is different between developed countries and developing countries. In Vietnam, the corporate income tax is a most important tax and its contribution to the state budget is higher than other taxes. The purpose of this article is to analyze the determinants of corporate income tax burden in Vietnam. Through the descriptive statistics method, the findings show that the corporate income tax burden is the highest in all of Vietnam's taxes, about 10% per year during the period of 1999-2012. Through the empirical method, the author finds that there are three quantitative factors and one qualitative factor affecting the burden of Vietnam's corporate income tax, includes revenue from corporate income tax, GDP at current prices, tax rate and time trend. JEL classification numbers: H21, H24, H26, F23
... Ряд исследователей подтвердили наличие такого переложения. Для изучения этого вопроса использовались модели общего равновесия [Майбуров, 2007;Felix, 2007;Ebrahimi, Vaillancourt, 2016] и модели переговоров (wage bargaining model) [Arulampalam et al., 2012;Exbrayat, Geys, 2016]. В зависимости от спецификации моделей, периода исследования и прогнозов, результаты показали наличие переложения в размере от 7 до 50 %. ...
... The paper concludes that as the capital tax rate increases, the burden falls both on labor and capital, with labor bearing slightly more than half of this burden. Arulampalam, Devereux, and Maffini (2007) use company-level European data to estimate the wage effects of tax burdens that differ between firms. The results show that firms with greater tax obligations pay lower wages. ...
Article
Full-text available
This paper estimates the incidence of corporate taxes in an emerging economy –India- using the data from 5,666 business firms listed in the Bombay Stock Exchange (BSE) and the National Stock Exchange of India (NSE) for the period 2000-15. Using the dynamic panel models, we find that capital bear the burden of corporate taxation relatively more than the labour. Our findings highlight that the effective tax rate is higher for the small corporate firms than the gigantic firms. The tax policy implications for strengthening the wage bargaining frameworks is insignificant as we found the wage determination in India is mostly outside the purview of fiscal policy practices. Further research is required to understand whether less incidence of corporate taxation on wages in India is due to base erosion and profit shifting.
... Less capital means lower wages so that the incidence of a source-based capital tax will fall on workers. Empirical evidence suggests that, indeed, the lion's share of the corporate tax burden falls on wages (Arulampalam, Devereux, and Maffini, 2012)-although this conclusion is not undisputed (Gravelle 2013). ...
Article
This paper discusses the theory and practice of tax design to achieve an efficient and equitable outcome, i.e. in support of inclusive growth. It starts with a discussion of the key principles from tax theory to guide practical tax design. Then, it elaborates on more granular tax policy, discussing key choices in the structure of the personal income tax on labor and capital income, taxes on wealth, the corporate income tax, and consumption taxes. The paper concludes by highlighting the political economy considerations of the issues with concrete recommedtions as to how to implement tax reform.
... Washington has praised corporate tax cuts as a highly promising policy tool for creating jobs and accelerating the tepid wage growth that U.S. workers have experienced over the past several decades. However, economists have long debated this approach, because the existing empirical literature yielded mixed findings and focused exclusively on developed countries (Arulampalam et al. 2012;Liu and Altshuler 2013;Ljungqvist and Smolyansky 2014;Su arez Serrato and Zidar 2016;Fuest et al. 2018;Zidar 2019). 23 Column 1 of Table 7 reports no significant impact from the OSO tax cut on firm-level average wages. ...
Article
Recent years have seen a sustained decline in the labor share around the world. This paper studies this trend by focusing on the effect of corporate income taxes on firm-level labor shares. From 2010 to 2013, the Chinese central government cut the corporate income tax rate in 21 cities for service firms whose revenue from outsourcing services offshore surpassed half of their total revenue. Leveraging a regression discontinuity design with proprietary administrative data, we find that a one percentage point decrease in the statutory corporate income tax rate induces a one percentage point decrease in the firm-level labor share. Firms respond to the tax cut by increasing their physical capital and bank borrowing while keeping their employment unchanged, consistent with a capital deepening process documented in recent theoretical models. Our results suggest that falling corporate income taxes could have contributed to the global decline in the labor share.
... The studies includeArulampalam et al. (2012),Felix (2007),Gravelle and Smetters (2006),Harberger (2008),Hassett and Mathur (2006),Mutti and Grubert (1985),Randolph (2006), andFuest et al. (2018) seeTable 13.15 in NOU (2014) for an overview.Content courtesy of Springer Nature, terms of use apply. Rights reserved. ...
Article
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In this paper, we analyse the passthrough from corporate taxes to investments by including two novel channels into a DSGE model for a small open economy. We capture both how foreign firms relocate and invest in the country when corporate taxes are reduced and how the inflow of FDI increases exports which spills over to domestic firms, that then increase their investment further. Our extended model allows us to study the importance of both transmission mechanisms and how they interact through crowding out effects. The corporate tax cut becomes self-financed when FDI-export spillovers are included, but only if other countries do not follow suit and lower their corporate tax rates. The largest self-financing contributions come from increases in various labor and consumption tax bases. A reduction in profit shifting further contributes to financing the tax cut. Our findings suggest that corporate tax levels internationally are not in equilibrium and that there are large fiscal incentives to further cut corporate taxes and reap the benefits from increased tax bases.
... Several studies showed a difference in the allocation of resources among favourable and unfavourable areas to the ruling party (Lindbeck and Weibull 1987;Dixit and Londregan 1996;Bardhan and Mookherjee 2010). This is the case in India, where, after the elections, partisan districts received transfers that are more than 16 greater than those of non-partisan districts (Arulampalam, Devereux, and Maffini 2010). ...
Article
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In this paper, we analyse the impact of income inequality on Socio-Political Instability (hereinafter SPI) in Sub-Saharan Africa from 1990 to 2018 with a sample of 47 countries. We first present the theoretical and empirical debate on income inequality and SPI. This literature review allows us to measure SPI using the principal component analysis method and hierarchical clustering and partitioning to analyse the similarities and differences between countries from a multidimensional perspective. We then estimate the SPI concerning income inequality and democracy. The findings are that assassinations are not linked to a regime’s duration, and the duration of a regime reduces if coups d’état (successful or not) are rampant. Between democracy and income inequality, the former has 34 times more impact on SPI. GDP growth increases SPI and education reduces SPI. https://doi.org/10.26493/1854-6935.19.49-72
... What is the evidence? Two papers by Mathur-Hassett (2006) and Arulampalam et al. (2012) both examine the incidence of the corporate tax 68 An arm's-length price for a transaction within a firm is the price that transaction would have on the open market. 69 As seen in section 3.3.5.1, neutral taxation by the firm's home country induces the firm to use arm's length pricing as long as there are any real costs of deviating from arm's-length pricing. ...
Book
Cambridge Core - Macroeconomics - The Role of the Corporate Tax - by Roger Gordon
... Higher corporate taxes might also result in higher prices from manufacturing corporations, hence shifting the burden to consumers (Ablett and Hart, 2005). Arulampalam et al. (2012) and Fuest et al. (2018) analyze the extent to which taxes on corporate income are passed on to wages, and find that workers bear about one-half of the total tax burden. Clausing (2013)'s review of the empirical work in this specific area shows that the empirical evidence of adverse effects on labor contains several pitfalls related to the robustness of results. ...
Article
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This article surveys the literature on the relationship between corporate income taxation and inequality through the lens of the recent book The triumph of injustice—How the rich dodge taxes and how to make them pay by Saez and Zucman (2019). First, we analyze the nexus between corporate taxation and inequality by reviewing both studies that highlight the curbing effect of corporate tax on inequality, and by examining studies claiming that more corporate taxation might paradoxically raise personal inequality. Then we proceed by identifying current practices in taxing multinational entities, and provide an overview of the latest estimates on nations’ missing fiscal revenues. Finally, we discuss the policy proposals put forward by Saez and Zucman (2019) to reform corporate taxation at the global level through the introduction of a global corporate minimum tax.
... Analyzing union wage premiums, Felix and Hines [2009] find that workers in unionized firms capture slightly over half of the benefits of low tax rates. Arulampalam et al. [2012]'s analysis of wages and corporate taxes in Europe agrees with this finding, suggesting that about half of the burden of corporate taxes falls on labor. Looking at cross-industry differences in corporate tax rates in the U.S., Liu and Altshuler [2013] find that the elasticity of wages with respect to the corporate marginal effective tax rate is higher in more concentrated industries, a fact seemingly at odds with the findings of this chapter, which suggest that greater concentration is tied to larger excess returns due to the tax cut. ...
Thesis
My dissertation studies three cases in which the perception of current policy or beliefs about future policy shaped economic decisions. Issues of attention and beliefs about the future can have tremendous importance both because agent actions reveal what they believe about the future, such as in the first and third chapters, or because misperception change how agents are affected by policy, such as in the second chapter. The first chapter measures the effect of the 2017 Tax Cuts and Jobs Act on share prices of publicly traded firms, finding that the most profitable firms, and those in concentrated industries, benefited the most. The tax bill significantly reduced corporate tax rates, thereby increasing share prices, particularly at the top. Among firms with the highest profit rates, more than 80 percent rose in value on news of the tax reform, whereas among less profitable firms, fewer than 60 percent appreciated. By every measure, stock market gains coincident with the tax bill were concentrated among firms with greater market power. This pattern is consistent with economic rents being important components of the values of large U.S. corporations. The second chapter of my dissertation looks at how to measure welfare in a world where tax policy might be misperceived by agents. Recent developments in behavioral public economics have shown that heterogeneous biases prevent point identification of deadweight loss. The second chapter replicates this result for an arbitrary (closed) consumption set, whereas previous results on heterogeneous attention focused on binary choice. It finds that one can bound the efficiency costs of taxation based on aggregate features of demand. When individuals have linear demand functions, the bounds for deadweight loss are easy to calculate from linear regressions. While the first chapter of my dissertation looks at the effects of expected policy, the third and last chapter looks at higher-order moments. Forecasts of the consequences of tax changes usually assume that economic actors expect these changes are permanent, despite the inevitable political uncertainty that could lead to future reversals or further changes. This reasoning extends to when a firm's tax burden is correlated to the success of its ventures. The third chapter shows how a firm's belief about how government policy is correlated with the input's marginal product distorts its risk profile, leading it to change its input decision. Generally speaking, input use will be discouraged if the firm faces high taxes precisely when the input is more productive. The last chapter shows that in a world of policy uncertainty this holds under an arbitrary tax system, and in particular it holds even if inputs can be perfectly deducted from the firm's taxable income. Whenever the covariance between policy and payoff is zero, the model replicates the classical result that the deductibility of input expenses leaves the decision undistorted. The third chapter uses this theoretical relationship in an empirical model of asset pricing to infer what investors believe about how future government policy correlates with their risky investments in different firms in the stock market. Each chapter’s analysis can be read on its own, but the unifying theme is that in each case issues of perception and belief were central in either identifying current beliefs about the world, or in understanding the real impact of economic policy on agent welfare.
... In other words, investors do not control the tax revenues that differ endogenously with output fluctuations and changes in the tax base due to other factors, the rates are decisive. On the contrary, Feldstein, Dicks-Mireaux, and Poterba (1983); Dwenger, Rattenhuber, and Steiner (2017) ;and Arulampalam, Devereux, and Maffini (2012) confirmed that the increase in corporate tax rates resulted in an increase of negative impacts through lower investment and thus to a reduction in returns from other production factors, such as capital. The authors further stated that while small countries with a small share of domestic markets set their effective tax rates to almost zero values, large countries maintain much higher effective tax rates. ...
Article
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Effective tax rates are presented by indicators of the actual corporate tax burden, which take into account the impact of all the elements listed in the legislation. The submitted contribution explores the issue of effective taxation through effective average tax rates (EATRs) focusing on agricultural production enterprises. The analysis assessed the effect of changing the statutory tax rate (and other taxes and factors) on changing the effective average rate of capital. Taxation efficiency was monitored for selected intangible and tangible assets for 2004 and 2018. Analysis indicated a depreciation tax shield that tracked the amount of tax savings on capital investment as well as the economic rent of the project with taxation. The analysis showed that a 3% increase in the statutory rate over the reference period increased the effective average corporate rates for intangible assets by 13.35%, tangible assets by 14.25% and inventories by 16.63%. The highest annual tax saving was achieved in 2018 for tangible assets of € 4,647.50, with a four-year return.
... Employing a panel of OECD countries in the period 1960, Checchi & Garcia-Peñalosa (2010 argue that personal income inequality is affected by the wage differential, labour share and unemployment rate, the overall effect of these institutions being ambiguous. Using data on 55,082 companies operating in nine European countries between 1996 and 2003, Arulampalam, Devereux & Maffini (2012) calculate the long-term elasticity of labour costs with respect to income tax rate, finding out that an exogenous tax rise by $1 would reduce the wage by 49 cents. Plasman, Rusinek & Rycx (2007) use a harmonized matched employer-employee database to examine the impact of multi-level collective bargaining on wages in the manufacturing sector in Denmark, Belgium and Spain, indicating that, overall, single-employer bargaining has a positive effect on wage levels and dispersion. ...
Article
The present paper focuses on the comparison of wage levels across OECD countries, the research data coming from an official OECD website. The following eight variables are employed in this study – the average wage, minimum wage, GDP per capita, tertiary education attainment, employment ratio, trade unions, labour productivity and inflation rate. The average wage represents the main explained variable in regression and correlation analysis, the remaining seven variables being used as potential explanatory ones. In order to compare living standards in different countries, average and minimum wages as well as per capita GDP data were adjusted to relative purchasing power parity. The principal objective was to identify which explanatory variables statistically significantly affect the average wage. The analysis showed that only three of them – namely the employment ratio, GDP per capita and labour productivity – have a significant effect at a 5% statistical level. The regression hyperplane with a forward stepwise selection was applied. Nine clusters of OECD countries were created based on both all the eight variables and four of them selected in regression analysis (the average wage and three explanatory ones) with the aim to identify the countries that coexist in the same cluster. Ward's method and Euclidean distance are utilized in cluster analysis, the number of clusters being determined with the use of the Dunn index. The study also aims at the prediction of the average wage by 2022, which was made via exponential smoothing of time series. (The greatest purchasing power is reported by Luxembourg, Switzerland, Iceland, the U.S., the Netherlands, Denmark, Norway and Austria, the highest average wage growth rate by 2022 being expected in the Baltic and some other post-communist countries.)
... Corporate taxes tend to be progressive in theory, but the incidence eventually depends on the relative mobility of capital and labor (Auerbach 2006). Evidence from high-income countries suggests that a large share of the tax burden from corporate taxes falls on wages (Arulampalam et al. 2012;Fuest et al. 2018;Suárez Serrato and Zidar 2016), but there is no evidence that corporate tax cuts in LMICs would lead to higher wages. In the case of direct compensation, such as grandfathering in an emissions trading scheme, the distributional effect will also likely be regressive in LMICs. ...
... This paper also contributes to the literature investigating the tax shifting from firms to workers by presenting empirical evidence from a developing country. Following the seminal work by Harberger (1962) and Cragg et al. (1967), a large body of literature has been developed to study the incidence of corporate taxes on wages (Auerbach 2006;Gravelle and Smetters 2006;Felix and Hines 2009;Arulampalam et al. 2012;Fuest et al. 2018). By far, most evidence comes from industrialized countries such as Germany (Bauer et al. 2012;Dwenger et al. 2017;Fuest et al. 2018) and the USA (Felix and Hines 2009;Liu and Altshuler 2013). ...
Article
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This paper provides empirical evidence on how intergovernmental revenue relations would affect governments’ incentives on tax enforcement in a developing country. By taking advantage of the exogenous shock induced by China’s corporate tax income revenue sharing reform in 2002, I find that the local governments would increase tax enforcement on local business tax and surcharges (BTS) to offset the adverse fiscal shock. In addition, such tougher tax enforcement was heterogeneous across firms. The increased effective BTS was mostly driven by non-state-owned enterprises and domestic firms. This paper further shows that the incidence of corporate tax could be passed onto workers through lower wages and benefits. On average, the share of corporate tax burden borne by workers in China is approximately 62%, which is higher than the estimate in Germany (Fuest et al. in Am Econ Rev 108(2):393–418, 2018).
... Our results for multinational firms look similar to the publicly traded firm results, with all of the point estimates indistinguishable from zero until the 99 th percentile, at which the semi-elasticity estimate is 1.9. Small or negligible earnings effects for multinational firms are also consistent with other models implying that multinational firms may have increased bargaining power relative to workers, leading to smaller wage effects (Arulampalam, Devereux and Maffini 2012). These models suggest that wage effects will be smaller if workers are more mobile across borders, as for multinationals with the potential to hire globally. ...
Article
This paper investigates how corporate tax changes affect workers’ earnings. We use a dataset of U.S. worker-level W-2 filings matched with corporate tax returns and study the implementation of the Domestic Production Activities Deduction (DPAD). We find the DPAD tax rate reduction has a substantial effect on the distribution of annual wage earnings within a firm. Earnings of workers at the top of their firm’s earnings distribution rise relative to those at the bottom of the distribution. We estimate a semi-elasticity of average earnings of 1.1 with respect to the DPAD marginal tax rate reduction, while the semi-elasticity of median earnings is notably smaller—0.5. Furthermore, we estimate a semi-elasticity of 1.3 at the 95th percentile of workers’ earnings and 2.7 at the 99th percentile. This trend of larger semi-elasticities at the top of the earnings distribution is especially pronounced for small firms. Looking at overall employment effects, we see no change overall, but the number of employees rises at small firms and declines at large firms. In contrast, we find that capital investment rises for large firms, suggesting that the DPAD also resulted in domestic capitallabor substitution for large corporations. Our paper has significant implications for assessing the progressivity of the U.S. tax code and for analyzing the effect of corporate tax policy changes on the U.S. income distribution.
... It has proved difficult to identify credible natural experiments for corporate tax reforms or to control for the many developments occurring within countries at the same time as corporate tax changes. A larger recent literature on corporate tax incidence looks within countries, considering differences across industries and across states or regions, for the United States as well as other countries, and using a range of models and assumptions (or examples, see Arulampalam et al. 2012;Liu and Altshuler 2013;Suárez Serrato and Zidar 2016;Fuest, Peichl, and Siegloch 2018). The findings are typically that a large share of the corporate tax falls on labor-quite plausible for changes adopted in a small part of a country in which there is considerable capital mobility, but not directly applicable to the issue in the recent debate of how the Tax Cuts and Jobs Act would affect US wages. ...
Article
On December 22, 2017, President Donald Trump signed the Tax Cuts and Jobs Act (TCJA), the most sweeping revision of US tax law since the Tax Reform Act of 1986. The law introduced many significant changes. However, perhaps none was as important as the changes in the treatment of traditional “C” corporations—those corporations subject to a separate corporate income tax. Beginning in 2018, the federal corporate tax rate fell from 35 percent to 21 percent, some investment qualified for immediate deduction as an expense, and multinational corporations faced a substantially modified treatment of their activities. This paper seeks to evaluate the impact of the Tax Cuts and Jobs Act to understand its effects on resource allocation and distribution. It compares US corporate tax rates to other countries before the 2017 tax law, and describes ways in which the US corporate sector has evolved that are especially relevant to tax policy. The discussion then turns the main changes of the Tax Cuts and Jobs Act of 2017 for the corporate income tax. A range of estimates suggests that the law is likely to contribute to increased US capital investment and, through that, an increase in US wages. The magnitude of these increases is extremely difficult to predict. Indeed, the public debate about the benefits of the new corporate tax provisions enacted (and the alternatives not adopted) has highlighted the limitations of standard approaches in distributional analysis to assigning corporate tax burdens.
... In Randolph (2006) the incidence depends on the proportion of capital in factor income and the author finds that labor bears between 45% and 75% of the tax burden. Arulampalam, Devereux and Maffini (2012) by using a sample of European firms find that a 1$ increase in the tax bill reduces real wages by around 50 cents. Hassett and Mathur (2015) by working with a panel of 72 countries over twenty years find that wages are very responsive to corporate taxation when countries are small. ...
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This article proposes an original review of the literature on tax competition, and provides new evidence concerning different types of footloose capital: the intensity of strategic interactions is three time stronger for financial assets than for less mobile capital (e.g. industrial buildings). We also present tax optimization techniques used by Multi-National Firms (MNFs) and document some case studies regarding the foregone tax revenue due to evasion. Amounts saved by firms are comparable to the annual contributions to the EU budget by countries like the UK, Ireland, the Netherlands or Luxembourg. We estimate that the total revenue losses for the EU governments due to corporate tax avoidance amount to almost 100 billion 5. After this description of the failure of the current system of taxation, this article analyzes alternative schemes such as the Common Consolidated Corporate Tax Base (CCCTB) and concludes with the outlook of a European corporate income as a genuine own resource for the EU budget.
... Correspondingly, Desai, Foley and Hines (2007) in their study on labour and capital's shares of the corporate tax burden found that between 45 and 75 percent of the tax burden is paid by employees. The burden of corporate tax on employees through real wages decline was also confirmed by Arulampalam, Devereux and Maffini (2012). Analysing a direct incidence of corporate income taxes they found that a 1 percent increase in corporate results in 9.3percent decline in employees real wages. ...
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Unemployment growth is one of the numerous challenges in the South Africa society. Several policies and strategies have been put in place to deal with the issue but still, the unemployment rate remains high. While job creation and corporate tax are declining, employed people fight for wages increment. With this dilemma, it is important to analyse how the two economic indicators (corporate income tax and real wages) affect employment level into the current South African economy. The aim of this study is to examine the responsiveness of employment to the change in real wages and the corporate income tax. A sample size of 86 observations of quarterly data starting from 1995q1 to 2016q2 was employed to analyse the relationship between dependent and independent variables. To achieve the study objectives different econometric approaches such as unit root test, ARDL model, ECM, Granger causality and diagnostic tests were employed. Findings of the study revealed the presence of long and short-run relationships among variables. It was found that, in the long run, high rate of corporate tax and real wages leads to unemploymentin the South African non-agricultural sectors. In the short run, an inverse relationship between corporate income taxation, real wages and employment were found. The findings of Granger causality test revealed that employment isnot an indicator of short-run corporate income tax and real wages dynamisms. Additionally, the study found that in some instances, the level of employment depends on the rate of real wages and tax paid by corporates. Since employment growth is more sensitive towards corporate income tax, the government should wisely act on the trade-off between employment and the corporate income tax.
... 16 In 2007, the German government increased the standard VAT rate by 3%-points (from 16% to 19%). 17 There exists a related literature on tax incidence in the context of corporate income taxes that suggests these alternatives (e.g., Harberger 2008; Arulampalam et al. 2012;Bauer et al. 2012). However, the incidence mechanism of corporate income taxes may be different to that of VAT. ...
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2019 by the National Bureau of Economic Research. All rights reserved. This paper examines corporations’ actions, and statements about actions, following the tax law change known as the Tax Cuts and Jobs Act of 2017 (TCJA). Specifically, we examine four different outcomes: bonuses (or other actions that benefit workers), announcements of new investments, share repurchases, and dividend announcements. We find that 4% of public firms in our sample announced in the first quarter of 2018 they would pay some portion of their tax savings toward workers. In terms of investment, we find that 22% of the S&P 500 firms in our sample mentioned in earnings conference calls that they would increase investment because of the TCJA. We find a general increase in share repurchases following the passage of the TCJA, but the increase is extremely concentrated in a small number of firms. We find only nine firms that announced a new share repurchase plan explicitly attributed the new plan to the TCJA. In regression analysis, we find that both political and economic variables explain TCJA-linked announcements. The analysis suggests that firms with greater expected tax savings from the TCJA are those most likely to announce payments to workers and plans to increase investment. Firms with a political action committee that donates more to Republican candidates are also more likely to announce benefits to employees.
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The past two decades have seen a rapid increase in interest in financial inclusion, both from policymakers and researchers. This chapter surveys the main findings from the literature, documenting the trends over time and gaps that have arisen across regions, income levels, and gender, among others. It points out that structural, as well as policy-related, factors, such as encouraging banking competition or channelling government payments through bank accounts, play an important role, and describes the potential macro and microeconomic benefits that can be derived from greater financial inclusion. It argues that policy should aim to identify and reduce frictions holding back financial inclusion, rather than targeting specific levels of inclusion. Finally, it suggests areas for future research.
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Schumpeterian theory simply predicts a negative relationship between corporate income tax and the economic growth rate because this tax decreases innovation rewards. However, empirical evidence for the effect of corporate tax on the growth rate is mixed. To fill this gap, this paper presents a Schumpeterian growth model with an endogenous market structure that generates an ambiguous relationship between the corporate tax rate and the growth rate. We analytically find that the relationship between the corporate tax rate and the growth rate can be either inverted U‐shaped or negative. In our endogenous market structure model, corporate tax cuts make the market more competitive and increase the costs of employing researchers through labor market equilibrium. Consequently, these two effects may dominate the Schumpeterian effect. In this case, a corporate tax cut may decrease economic growth.
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This paper evaluates a natural experiment which occurred in Ohio in 2005 when the state amended the tax system. The change sets up a dramatic corporate tax cut of 8.3 percentage points (p.p.) over the period 2006–2010 corresponding to a 96.9% reduction in the tax. Policymakers also reduced the personal income tax over the same period by 0.95 percentage point (p.p.). I investigate the incidence of the reform on wages in general and corporate wages in the short-run. To do so, I use a synthetic control method along with an event study design applied to individual records of the Current Population Survey (CPS). The results in this paper suggest that the corporate tax cut may have resulted in a one-time payment in corporate wages at the onset of the reform.
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This paper evaluates the effect of U.S. state corporate income taxes on union wages. American workers who belong to unions are paid more than their non-union counterparts, and this difference is greater in low-tax locations, reflecting that unions and employers share tax savings associated with low tax rates. In 2000 the difference between average union and non-union hourly wages was $1.88 greater in states with corporate tax rates below four percent than in states with tax rates of nine percent and above. Controlling for observable worker characteristics, a one percent lower state tax rate is associated with a 0.36 percent higher union wage premium, suggesting that workers in a fully unionized firm capture roughly 54 percent of the benefits of low tax rates.
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'This volume is the definitive word on the topic, and likely will remain so for some time. The editors have done a remarkable job of compiling a list of contributors that reads like a "Who's Who" on the topic, ensuring quality control and summarizing a daunting amount of material. Given the dramatic changes that have been occurring throughout the world with respect to trade unions, this is a timely and welcomed contribution.'- Morley Gunderson, University of Toronto, Canada.'A fine collection, written by the world's leading experts in this important area. If you want to know about what has been happening at the frontier of recent research on unions, this is the book for you.'- Andrew J. Oswald, University of Warwick, UK. This Handbook is an authoritative and invaluable reference tool, uniquely analysing the forces governing unionism, union behaviour and union impact from a variety of perspectives, both theoretical and empirical. The 14 chapters are written in an accessible style by acknowledged leading specialists from the fields of economics and industrial relations. They offer a truly international perspective on this important subject. © John T. Addison and Claus Schnabel 2003. All rights reserved.
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We use a unique firm-level panel of multinational parents and their foreign affiliates to analyze whether profits are shared across borders within multinational firms. Affiliate wages are estimated to respond to both affiliate and parent profitability. The elasticity of affiliate wages to parent profits per worker is approximately 0.03, which can explain over 20% of observed variation in affiliate wages. These results reveal a previously ignored aspect of rent sharing. They also reveal an important micro-level linkage with potential macro-level implications. International rent sharing can transmit economic conditions across countries, and can thereby provide an implicit risk-sharing mechanism. Copyright (c) 2005 President and Fellows of Harvard College and the Massachusetts Institute of Technology.
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This paper suggests a new test for rent-sharing in the U.S. labor market. Using an unbalanced panel from the manufacturing sector, it shows that a rise in a sector's profitability leads after some years to an increase in the long-run level of wages in that sector. The paper controls for workers' characteristics, for industry fixed effects, and for unionism. Richard A. Lester's (1952) range of wages is estimated, for rent-sharing reasons alone, at approximately 24 percent of the mean wage. Copyright 1996, the President and Fellows of Harvard College and the Massachusetts Institute of Technology.
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In this paper we estimate the effect of the financial conditions of firms on negotiated wage settlements and on employment using a sample of Canadian collective bargaining agreements from 1965 to 1983. We find that ordinary least squares estimates of the effect of quasi-rents per worker on wages are positive but very small. However, we find a much larger effect when we instrument quasi-rents with measures of foreign competition shocks. We conclude that standard estimates of rent-sharing based on contract data seriously understate the impact of product market competition on negotiated wage settlements.
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We consider the impact of taxation when investors face a discrete choice between two or more mutually exclusive projects; in particular we consider the location choice of multinationals. Such choices depend on an effective average tax rate. We propose a precise measure of this rate, which is shown to be equal to a weighted average of an effective marginal tax rate and an adjusted statutory tax rate, where the weights depend on the profitability of the investment. Estimates of the distribution of this measure are presented and compared for domestic and international investment in the USA, France, Germany and the UK. We analyse the impact of harmonising corporate tax rates in Europe on incentives to locate in France, Germany and the UK. Copyright Kluwer Academic Publishers 2003
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This paper studies the relationship between wage negotiations and the mode of foreign market penetration in a general equilibrium framework. We analyze the incentives of firms to set up a foreign production facility for improving their bargaining position vis-à-vis local unions. This renders the allocation of bargaining power among firms and unions a key determinant of the share of multinational enterprises and exporting firms. The economic mechanisms in this paper provide novel insights on how wages and unemployment rates adjust to economic integration. We distinguish between short-run effects for a given number of competitors and long-run effects after firm entry/exit. This allows us to identify possible globalization paths and to analyze their consequences for domestic labor markets.
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Economics is at its best when it offers important insights that contradict initial, casual impressions. The theory of tax incidence provides a rich assortment of such insights. Tax incidences basic lesson that the real and nominal tax burdens are not necessarily related means that taxes on capital are born by workers, that investment incentives are injurious to capitalists, that taxation of foreigners simply represent indirect domestic taxation, and that generations alive many decades in the future may be supporting those currently alive. The study of tax incidence is both fun, because it offers such surprising findings, and very important, because of its implications about the impacts of government policies. Much of the current tax incidence literature considers the settings of certainty, perfect information, and market clearing. As more sophisticated models relax these assumptions, the theory of tax incidence is enriched and, with all probability, provides even more surprising and exciting economic insights.
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The "difference" and "system" generalized method of moments (GMM) estimators for dynamic panel models are growing steadily in popularity. The estimators are designed for panels with short time dimensions (T), and by default they generate instruments sets whose number grows quadratically in T. The dangers associated with having many instruments relative to observations are documented in the applied literature. The instruments can overfit endogenous variables, failing to expunge their endogenous components and biasing coefficient estimates. Meanwhile they can vitiate the Hansen J test for joint validity of those instruments, as well as the difference-in-Sargan/Hansen test for subsets of instruments. The weakness of these specification tests is a particular concern for system GMM, whose distinctive instruments are only valid under a non-trivial assumption. Judging by current practice, many researchers do not fully appreciate that popular implementations of these estimators can by default generate results that simultaneously are invalid yet appear valid. The potential for type I errors—false positives—is therefore substantial, especially after amplification by publication bias. This paper explains the risks and illustrates them with reference to two early applications of the estimators to economic growth, Forbes (2000) on income inequality and Levine, Loayza, and Beck (LLB, 2000) on financial sector development. Endogenous causation proves hard to rule out in both papers. Going forward, for results from these GMM estimators to be credible, researchers must report the instrument count and aggressively test estimates and specification test results for robustness to reductions in that count. The Center for Global Development is an independent think tank that works to reduce global poverty and inequality through rigorous research and active engagement with the policy community. Use and dissemination of this working paper is encouraged, however, reproduced copies may not be used for commercial purposes. Further usage is permitted under the terms of the Creative Commons License. The views expressed in this paper are those of the author and should not be attributed to the directors or funders of the Center for Global Development. JEL codes: C23, G0, O40. Keywords: difference GMM, system GMM, Hansen test, small-sample properties of GMM, financial development, inequality.
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The system GMM estimator for dynamic panel data models combines moment conditions for the model in first differences with moment conditions for the model in levels. It has been shown to improve on the GMM estimator in the first differenced model in terms of bias and root mean squared error. However, we show in this paper that in the covariance stationary panel data AR(1) model the expected values of the concentration parameters in the differenced and levels equations for the cross-section at time t are the same when the variances of the individual heterogeneity and idiosyncratic errors are the same. This indicates a weak instrument problem also for the equation in levels. We show that the 2SLS biases relative to that of the OLS biases are then similar for the equations in differences and levels, as are the size distortions of the Wald tests. These results are shown to extend to the panel data GMM estimators. Copyright (C) The Author(s). Journal compilation (C) Royal Economic Society 2010.
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The difference and system generalized method-of-moments estimators, developed by Holtz-Eakin, Newey, and Rosen (1988, Econometrica 56: 1371-1395); Arellano and Bond (1991, Review of Economic Studies 58: 277-297); Arellano and Bover (1995, Journal of Econometrics 68: 29-51); and Blundell and Bond (1998, Journal of Econometrics 87: 115-143), are increasingly popular. Both are general estimators designed for situations with "small T , large N" panels, meaning few time periods and many individuals; independent variables that are not strictly exogenous, meaning they are correlated with past and possibly current realizations of the error; fixed effects; and heteroskedasticity and autocorrelation within individuals. This pedagogic article first introduces linear generalized method of moments. Then it describes how limited time span and potential for fixed effects and endogenous regressors drive the design of the estimators of interest, offering Stata-based examples along the way. Next it describes how to apply these estimators with xtabond2. It also explains how to perform the Arellano-Bond test for autocorrelation in a panel after other Stata commands, using abar. The article concludes with some tips for proper use. Copyright 2009 by StataCorp LP.
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Estimation of the dynamic error components model is considered using two alternative linear estimators that are designed to improve the properties of the standard first-differenced GMM estimator. Both estimators require restrictions on the initial conditions process. Asymptotic efficiency comparisons and Monte Carlo simulations for the simple AR(1) model demonstrate the dramatic improvement in performance of the proposed estimators compared to the usual first-differenced GMM estimator, and compared to non-linear GMM. The importance of these results is illustrated in an application to the estimation of a labour demand model using company panel data.
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This paper considers the factors that influence the locational decisions of multinational firms. A model in which firms produce differentiated products in imperfectly competitive markets is developed, in the spirit of Horstmann and Markusen (1992). Firms choose between a number of foreign locations; the outside options of exporting to or not serving the foreign market are explicitly modelled. Particular attention is paid to the impact of profit taxes; the separate roles of effective average and marginal tax rates are identified. The model is applied to a panel of US firms locating in the European market. Agglomeration effects are found to be important. The effective average tax rate plays a role in the choice between locations, but not in the choice of whether to locate production in Europe compared with one of the outside options.
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This paper presents specification tests that are applicable after estimating a dynamic model from panel data by the generalized method of moments (GMM), and studies the practical performance of these procedures using both generated and real data. Our GMM estimator optimally exploits all the linear moment restrictions that follow from the assumption of no serial correlation in the errors, in an equation which contains individual effects, lagged dependent variables and no strictly exogenous variables. We propose a test of serial correlation based on the GMM residuals and compare this with Sargan tests of over-identifying restrictions and Hausman specification tests.
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This article reexamines the incidence and efficiency cost of the discriminatory taxation of capital income in the United States. It is argued that Harberger's 1966 estimates of the static welfare loss were subject to two important mistakes. Their correction lowers the efficiency cost estimates approximately 38 percent. The paper also compares the corrected results of the Harberger model with those achieved with an algorithmic solution procedure for a general equilibrium model. When the latter approach is used with the same two-sector division of production, the results are very similar to those of Harberger's model. With disaggregation to 12 production sectors, however, the loss estimates increase by an average of 40 percent.
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This paper examines the impact of technological innovation on wages using a panel of British firms. A head-count measure of major innovations between 1945 and 1983 is combined with share price and accounting information. Innovating firms are found to have higher average wages but rival innovation tends to depress own wages. This appears consistent with a model where wages are partly determined by a sharing in the rents generated by innovation. In other words, innovation may be a good instrument for proxies for rents such as profitability, quasi rents, or Tobin's (average) Q. Instrumental variable estimates of the elasticity between wages and quasi rents are about 0.29. Copyright 1996, the President and Fellows of Harvard College and the Massachusetts Institute of Technology.
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This paper surveys major issues in the theory of tax incidence. These include the incidence of taxes in dynamic as well as static economies and open as well as closed economies. The survey does not represent a comprehensive review of the literature, rather it is offered to the reader as a pedoqogical piece that may be of use in teaching the theory of tax incidence.
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This chapter reviews developments to improve on the poor performance of the standard GMM estimator for highly autoregressive panel series. It considers the use of the "system" GMM estimator that relies on relatively mild restrictions on the initial condition process. This system GMM estimator encompasses the GMM estimator based on the non-linear moment conditions available in the dynamic error components model and has substantial asymptotic efficiency gains. Simulations, that include weakly exogenous covariates, find large finite sample biases and very low precision for the standard first differenced estimator. The use of the system GMM estimator not only greatly improves the precision but also greatly reduces the finite sample bias. An application to panel production function data for the US is provided and confirms these theoretical and experimental findings.
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The conventional view holds that domestic labor, not domestic capital, bears most of the long-run burden of a corporate income tax in an open economy due to the ability of capital to move across borders. This result assumes that domestic and foreign products (as well as investments) are perfect substitutes. This paper includes imperfect product substitution within a multi-sector open-economy model, and shows that much of the burden may fall on capital. To be sure, if savings falls sufficiently, much of the burden shifts to labor, but this fact also holds in a closed economy. Hence, the debate about tax incidence must focus more on the savings response and less on whether an economy is open or closed.
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The equilibrium of capital and equilibrium market prices are derived for a world economy with a unified securities market, mobile capital, no uncertainty, and varying tax rates on different sources of income in each country. The paper then characterizes optimal tax rates for a small country in this setting, focusing on the peculiar incentives created when the before-tax rate of return differs among securities due to differences in their typical tax treatment. Copyright 1986 by American Economic Association.
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This paper studies estimators that make sample analogues of population orthogonality conditions close to zero. Strong consistency and asymptotic normality of such estimators is established under the assumption that the observable variables are stationary and ergodic. Since many linear and nonlinear econometric estimators reside within the class of estimators studied in this paper, a convenient summary of the large sample properties of these estimators, including some whose large sample properties have not heretofore been discussed, is provided.
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Dit doctoraat behandelt een vergelijkende empirische studie van vennootschapsbelastingconcurrentie zowel op regionaal als op Europees niveau. Niet alleen landen verschillen onderling, maar ook regio's binnen ��n land kunnen grote economische verschillen vertonen. Dit doctoraat bestaat uit vier hoofdstukken. De eerst twee hoofdstukken bestuderen regionale belastingsverschillen binnen ��n land. Belgi� en Itali� worden als voorbeeld genomen in deze studies omwille van hun sterk verschillende regio's. Ondanks het feit dat de vennootschapsbelasting een federale materie is in deze landen, kan de effectieve belastingdruk van bedrijven en regio's sterk verschillen. Mogelijke redenen zijn de complexiteit van de belastingregels, belastingsaftrekken voor bepaalde ondernemingen of investeringen in bepaalde regio's en voordelige belastingsregimes. Een derde hoofdstuk onderzoekt belastingconcurrentie tussen Europese landen onderling. Tenslotte, behandelt hoofdstuk vier de invloed van belastingen, economische integratie en instituties op export specialisatie in Centraal- en Oost-Europa. Een eerste hoofdstuk in dit doctoraat bestudeert regionale belastingsverschillen in Belgi�. Deze studie, die uitgevoerd werd met gegevens van 12167 jaarrekeningen van grote Belgische ondernemingen, komt tot de conclusie dat de feitelijke belastingdruk van een gemiddeld Belgisch bedrijf 26% in plaats van 40.17% bedroeg tijdens de periode 1993-2002. Ook wijzen de resultaten erop dat de feitelijke belastingdruk tussen 1993 en 2002 gestegen is en dan vooral vanaf 1999. Een mogelijke verklaring is dat de overheid vanaf 1999 de belastbare basis verbreed heeft om in december 2002 het belastingtarief te kunnen verlagen tot 33.99%. Dit is een fenomeen dat ook in andere Europese landen geobserveerd wordt, namelijk het samengaan van een verlaging van de belastingvoet enerzijds maar een uitbreiding van de belastbare grondslag anderzijds om het effect op de begroting van het land te neutralis
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This paper investigates the relative importance of firm-specific factors (i.e., insider forces) in wage determination. Using firm-level data on 219 U.K. companies over 1974-82, it finds that a 1 percent rise in a firm's prices or productivity relative to the aggregate economy leads to a rise in relative wages of 0.1-0.2 percent. As a corollary to this, outside factors, like the aggregate wage and the unemployment rate, also play an important role. There is evidence for insider-based hysteresis effects, but these are inversely related to the extent to which firms take national agreements into account. Copyright 1990 by Royal Economic Society.
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Variations in company taxes are analyzed for a right-to-manage model, an efficient bargaining setting, and a seniority approach. Taxes cannot be shifted forward by the risk-neutral firm. Alternative income and bargaining power are allowed to vary with taxes. Employing the assymetric Nash solution, it is found that changes in a payroll, revenue, or profit tax can have differing implications for labor demand curve models and efficient bargaining solutions. This distinction might provide a novel basis for empirical work. Variations in bargaining power and, within a labor demand curve setting, the union's objective function do not change results. Copyright 1996 by Scottish Economic Society.
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One of the perennial problems of business cyde theory has been the search for a convincing empirical description and theoretical explanation of the behaviour of wage rates during fluctuations in output and employment. Even the empirical question is hardly settled, although the most recent careful study (Geary and Kennan) confirms the prevailing view that real-wage movements are more or less independent of the business cycle. There are really two subquestions here. The first presumes that nominal wage stickiness is the main route by which nominal disturbances have real macroeconomic effects, and asks why nominal wages should be sticky. The second focuses on real wages, and asks why fluctuations in the demand for labour should so often lead to large changes in employment and small, unsystematic, changes in the real wage.
Does the Open Economy Assumption really mean that Labor bears the Burden of a Capital Income Tax? in Advances in Economic Analysis and Policy Large Sample Properties of Generalised Method of Moment Estimators
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Gravelle, Jane G. and Kent A. Smetters. (2006). Does the Open Economy Assumption really mean that Labor bears the Burden of a Capital Income Tax? in Advances in Economic Analysis and Policy, Vol. VI(I), (Berkeley: Berkeley Electronic Press) 1548-1548. r32 Hansen, Lars P. (1982). Large Sample Properties of Generalised Method of Moment Estimators. Econometrica, Vol. 50 (1982), 1029-1054
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Auerbach, Alan J. (2006). Who Bears the Corporate Tax? A Review of What We Know, in Tax Policy and the Economy Blanchflower, David G., Andrew J. Oswald and Peter Sanfey. (1996). Wages, Profits and Rent-Sharing, Quarterly Journal of Economics, 111, 227-250. , Vol. 20, ed. James M. Poterba, (Cambridge: MIT Press)
Corporation tax incidence: reflections on what is known, unknown and unknowable Fundamental Tax Reform: Issues, Choices, and Implications
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Harberger, Arnold C., 2006. Corporation tax incidence: reflections on what is known, unknown and unknowable. In: Diamond, John W., Zodrow, George R. (Eds.), Fundamental Tax Reform: Issues, Choices, and Implications, 2006., MIT Press, Cambridge. Hassett, Kevin A., Mathur., Aparna, 2006. Taxes and wages. American Enterprise Institute Working Paper, 128. Kotlikoff, Laurence J., Summers, Lawrence H., 1987. In: Auerbach, Alan J., Feldstein, Martin (Eds.), Tax Incidence, In Handbook of Public Economics, 2., Amsterdam: Elsevier Science, North-Holland, pp. 1043–1092.
Employment Outlook International burdens of the corporate income tax. Congressional Budget Office Working Paper No
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OECD, 2006. Employment Outlook. OECD Publishing, Paris. Randolph, William G., 2006. International burdens of the corporate income tax. Congressional Budget Office Working Paper No. 09.
The ABCs of Corporation Tax Incidence: Insights into the Open-Economy Case, In: Tax Policy and Economic Growth. American Council for Capital Formation Center for Policy Research
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Harberger, Arnold C., 1995. The ABCs of Corporation Tax Incidence: Insights into the Open-Economy Case, In: Tax Policy and Economic Growth. American Council for Capital Formation Center for Policy Research, Washington, DC 51–73.
Stata Statistical Software: Release 11. StataCorp LP, College Station, TX. Van Reenen, John., 1996. The creation and capture of rents: wages and innovation in a panel of UK companies
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StataCorp, 2009. Stata Statistical Software: Release 11. StataCorp LP, College Station, TX. Van Reenen, John., 1996. The creation and capture of rents: wages and innovation in a panel of UK companies. Quarterly Journal of Economics 111, 195–226.
In: International Handbook of Trade UnionsEdward Elgar Publishing, Cheltenham Some tests of specification for panel data: Monte Carlo evidence and an application to employment equations
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Addison, John T., Schnabel., Claus, 2003. In: International Handbook of Trade UnionsEdward Elgar Publishing, Cheltenham. Arellano, Manuel, Bond., Stephen R., 1991. Some tests of specification for panel data: Monte Carlo evidence and an application to employment equations. Review of Economic Studies 58, 277–297.
Who bears the corporate tax? A review of what we know Tax Policy and the Economy Wages, profits and rent-sharing
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Auerbach, Alan J., 2006. Who bears the corporate tax? A review of what we know. In: Poterba, James M. (Ed.), Tax Policy and the Economy, 20., MIT Press, Cambridge. Blanchflower, David G., Oswald, Andrew J., Sanfey., Peter, 1996. Wages, profits and rent-sharing. Quarterly Journal of Economics 111, 227–250.
Labor and capital shares of the corporate tax burden: international evidence, mimeo
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Labor and Capital Shares of the Corporate Tax Burden: International Evidence, mimeo, ITPF and Urban- Brookings Tax Policy Center Conference of Who pays the Corporate Tax in an Open Economy?
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) (0.008) 2 nd Lag. log (value added per employee) 0
  • Lag
  • Log
Lag. log (value added per employee) 0.844 ** * 0.014 * 0.616 ** * 0.014 * (0.003) (0.008) (0.006) (0.008) 2 nd Lag. log (value added per employee) 0.274 ** * - 0.075 ** * (0.005) (0.006)
International Burdens of the Corporate Income Tax, Congressional Budget Office Working Paper No
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Randolph, William G. (2006). International Burdens of the Corporate Income Tax, Congressional Budget Office Working Paper No. 09.
Corporation Tax Incidence: Reflections on what is Known
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Harberger, Arnold C. (2006). Corporation Tax Incidence: Reflections on what is Known, Unknown and Unknowable, in Fundamental Tax Reform: Issues, Choices, and Implications,
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Concerning the Definition of Micro, Small and Medium-Sized Enterprises. Official Journal of the European Commission May. 2003/361/EC. (Brussels: Commission of the European Communities).