Discussion of “Taxation and The Life Cycle of Firms” by Erosa and González

Sebastian Dyrda

Journal of Monetary Economics, 2019, vol. 105, issue C, 131-134

Abstract: “Taxation and The Life Cycle of Firms” by Erosa and González provides a coherent framework to study the effects of different forms of taxing capital income on the life cycle of firms. In the quantitative part, the paper evaluates macroeconomic effects of eliminating the corporate income tax and replacing it with the uniform tax on all other forms of capital income. In this discussion I raise two issues. First, I point to the limitations of the modeling approach, which focuses only on entities subject to the corporate income tax. Second, I discuss recent evidence from firm-level data suggesting that privately-held firms and publicly-traded firms differ substantially, which is contrary to the implicit assumption made in the paper.

Keywords: Firm dynamics; Taxation; Firm heterogeneity; Pass-through businesses (search for similar items in EconPapers)
Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:eee:moneco:v:105:y:2019:i:c:p:131-134

DOI: 10.1016/j.jmoneco.2019.04.013

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