Corporate Taxes and Economic Inequality: A Credit Channel

Manthos D. Delis, Emilios C. Galariotis, Maria Iosifidi and Steven Ongena
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Manthos D. Delis: Audencia Business School
Emilios C. Galariotis: Audencia Business School
Maria Iosifidi: Montpellier Business School

No 23-29, Swiss Finance Institute Research Paper Series from Swiss Finance Institute

Abstract: Corporate taxation can have redistributive effects on income and wealth. We hypothesize and empirically establish such an effect working via bank credit. Using a unique sample of majority owned firms that apply for credit, we show that after a decrease in corporate tax rates the relatively poor get easier access to credit. However, this policy also considerably increases loan amounts and decreases loan spreads for the relatively rich. Ultimately, reducing the corporate tax rate predominantly increases the future income and wealth of relatively rich business owners.

Keywords: Corporate taxes; Economic inequality; Bank credit; Credit score (search for similar items in EconPapers)
JEL-codes: D63 G20 G21 H25 (search for similar items in EconPapers)
Date: 2023-02, Revised 2023-05
New Economics Papers: this item is included in nep-pbe
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Persistent link: https://EconPapers.repec.org/RePEc:chf:rpseri:rp2329

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