Who Benefits from State Corporate Tax Cuts? A Local Labor Market Approach with Heterogeneous Firms: Further Results

Juan Carlos Suárez Serrato and Owen Zidar

No 31206, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper estimates the incidence of state corporate taxes using new data and methods for estimating the effects on profits. We extend Suarez Serrato and Zidar (2016) by developing two new identification approaches that use the effects of business taxes on the labor demand of incumbent firms and local productivity to identify profit effects. We estimate these reduced-form effects using data from Census, show how reduced-form moments identify incidence and parameters, and provide incidence estimates using a variety of reduced-form approaches as well as a structural model. Across these approaches, we find that owners bear a substantial portion of incidence. Our central estimate is that firm owners bear half of the incidence, while workers and landowners bear 35-40 percent and 10-15 percent, respectively.

JEL-codes: H22 H25 H32 H71 J23 R30 R58 (search for similar items in EconPapers)
Date: 2023-05
New Economics Papers: this item is included in nep-lma, nep-pbe, nep-pub and nep-ure
Note: LS PE
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Published as Juan Carlos Suárez Serrato & Owen Zidar, 2024. "Who Benefits from State Corporate Tax Cuts? A Local Labor Market Approach with Heterogeneous Firms: Further Results," AEA Papers and Proceedings, vol 114, pages 358-363.

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