Who benefits from state corporate tax cuts? A local labour markets approach with heterogeneous firms

Juan Carlos Suárez Serrato and Owen Zidar

No 1502, Working Papers from Oxford University Centre for Business Taxation

Abstract: This paper estimates the incidence of state corporate taxes on the welfare of workers, landowners, and firm owners using variation in state corporate tax rates and apportionment rules. We develop a spatial equilibrium model with imperfectly mobile firms and workers. Firm owners may earn profits and be inframarginal in their location choices due to differences in location-specific productivities. We use the reduced-form effects of tax changes to identify and estimate incidence as well as the structural parameters governing these impacts. In contrast to standard open economy models, firm owners bear roughly 40% of the incidence, while workers and landowners bear 30-35% and 25-30%, respectively.

JEL-codes: F22 F23 H22 H25 H32 H71 J32 R23 R30 R58 (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-bec, nep-geo, nep-lma, nep-pbe and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Related works:
Journal Article: Who Benefits from State Corporate Tax Cuts? A Local Labor Markets Approach with Heterogeneous Firms (2016)
Working Paper: Who Benefits from State Corporate Tax Cuts? A Local Labor Markets Approach with Heterogeneous Firms (2014)
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