 Who truly bears (bank) taxes? Evidence from only shifting statutory incidenceGabriel Jiménez, David Martinez-Miera and José-Luis Peydró Journal of Public Economics, 2024, vol. 240, issue C Abstract: We analyze the effects of only shifting the statutory incidence of taxes by exploiting: (i) a mortgage tax shift from being levied on borrowers to being levied on banks, without tax rate changes; (ii) some areas –for historical reasons– being tax-exempt (or having different tax rates); and (iii) administrative data. After the shift, the average mortgage rate increases, less for households with more banking opportunities or with higher income. The tax pass-through is nonexistent for high-income households, but complete for low-income households. Consistently, banks’ risk-taking increases, especially by more policy-affected banks. Results are consistent with a model in which all borrowers have tax saliency issues and differ in their bargaining power vis-à-vis the lender. Overall, the evidence is inconsistent with the irrelevance of statutory incidence and suggests unintended consequences on inequality and banks’ risk-taking. Keywords: Tax pass-through; Tax incidence, banks; Inequality; Risk-taking; Mortgages (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:pubeco:v:240:y:2024:i:c:s0047272724001099 DOI: 10.1016/j.jpubeco.2024.105173 Access Statistics for this article Journal of Public Economics is currently edited by R. Boadway and J. Poterba More articles in Journal of Public Economics from Elsevier |
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