How Responsive are Firms to the Corporate Wealth Tax?
Camilo Gómez ()
Documentos CEDE from Universidad de los Andes - CEDE
The corporate wealth tax is commonly associated with a non-optimal policy in terms of fiscal revenue and efficiency. However, there is no empirical evidence regarding the behavioral response of firms to this tax. By using a bunching" methodology, which takes advantage of the non-linearities introduced by the tax design in Colombia, this paper estimates the elasticity of corporate wealth with respect to the statutory tax rate. Results indicate that, in the years when the tax is in force, we observe between 23.8% and 35.7% more firms at the wealth cuto_s where the tax rate changes. This implies estimated elasticities of 0.250 and 0.296 for firms with wealth around 3 billion pesos, which points out negative and inelastic responses of firms' wealth when facing an increase in the statutory tax rate. Absent _scal externalities, the estimated elasticities are associated with a revenue loss and marginal deadweight loss of around 1% of fiscal revenue on the evaluated taxpayer firms.
Keywords: Corporate wealth tax; wealth tax base elasticity; Colombia. (search for similar items in EconPapers)
JEL-codes: H25 H26 H32 D22 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:col:000089:017433
Access Statistics for this paper
More papers in Documentos CEDE from Universidad de los Andes - CEDE
Bibliographic data for series maintained by Universidad De Los Andes-Cede ().