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Corporate Taxes and Retail Prices

Scott Baker (), Stephen Teng Sun and Constantine Yannelis

No 27058, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We study the impact of corporate taxes on barcode-level product prices using linked survey and administrative data. Our empirical strategy exploits the dichotomy between the location of production and the location of sales, providing estimates free from confounding demand shocks. We find significant effects of corporate taxes on prices with a net-of-tax elasticity of 0.17. The effects are larger for lower-price items and products purchased by low-income households and weaker for high-leverage firms. Approximately 31% of corporate tax incidence falls on consumers, suggesting that models used by policymakers significantly underestimate the incidence of corporate taxes on consumers.

JEL-codes: G38 H22 H25 (search for similar items in EconPapers)
Date: 2020-04
New Economics Papers: this item is included in nep-gen, nep-ore, nep-pbe and nep-pub
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