EconPapers    
Economics at your fingertips  
 

Simulating corporate tax rate at Laffer curve's peak using microdata

Carmel Gomeh and Michel Strawczynski ()

Journal of Economics and Business, 2020, vol. 112, issue C

Abstract: This paper uses administrative panel micro-data of Israeli firms between 2006 and 2015 to simulate corporate tax rates at Laffer Curve's peak. We first propose a theoretical model where three effects interact: a mechanical effect, a dynamic effect - related to opening and closing firms - and an efficiency effect related to profits. We run regressions for opening and closing firms, and for profits, as a function of the effective corporate tax rate, together with a bunch of additional explanatory variables. Using the coefficients obtained from these regressions we estimate the tax rate at the Laffer Curve's peak between 26 and 38 percent – which is within the range shown in the literature based on macro data. Concerning branches, we found that food services is characterized by a low tax rate at the peak of the Laffer Curve (14 percent) while manufacturing is characterized by a high one (39 percent).

Keywords: corporate tax; Laffer curve (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0148619520300412
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jebusi:v:112:y:2020:i:c:s0148619520300412

DOI: 10.1016/j.jeconbus.2020.105930

Access Statistics for this article

Journal of Economics and Business is currently edited by Emanuele Bajo and Moritz Ritter

More articles in Journal of Economics and Business from Elsevier
Bibliographic data for series maintained by Catherine Liu ().

 
Page updated 2021-10-08
Handle: RePEc:eee:jebusi:v:112:y:2020:i:c:s0148619520300412