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The Structure of State Corporate Taxation and its Impact on State Tax Revenues and Economic Activity

Juan Carlos Suárez Serrato () and Owen Zidar

No 23653, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper documents facts about the state corporate tax structure | tax rates, base rules, and credits | and investigates its consequences for state tax revenue and economic activity. We present three main findings. First, tax base rules and credits explain more of the variation in state corporate tax revenues than tax rates do. Second, although states typically do not offset tax rate changes with base and credit changes, the effects of tax rate changes on tax revenue and economic activity depend on the breadth of the base. Third, as states have narrowed their tax bases, the relationship between tax rates and tax revenues has diminished. Overall, changes in state tax bases have made the state corporate tax system more favorable for corporations and are reducing the extent to which tax rate increases raise corporate tax revenue.

JEL-codes: H2 H25 H71 R5 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-acc, nep-pbe, nep-pub and nep-ure
Date: 2017-08
Note: PE
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Published as Juan Carlos Suárez Serrato & Owen Zidar, 2018. "The structure of state corporate taxation and its impact on state tax revenues and economic activity," Journal of Public Economics, vol 167, pages 158-176.

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