Who benefits from state corporate tax cuts? A local labour markets approach with heterogeneous firms
Juan Carlos Suárez Serrato () and
No 1502, Working Papers from Oxford University Centre for Business Taxation
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: H22 H25 H32 H71 R30 R23 R58 J32 F22 F23 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-geo, nep-lma, nep-pbe and nep-ure
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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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