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Corporate Taxes and Economic Inequality: A Credit Channel

Manthos Delis, Emilios Galariotis and Maria Iosifidi

MPRA Paper from University Library of Munich, Germany

Abstract: Corporate taxation can have redistributive effects on income and wealth. We hypothesize and empirically establish such an effect working via bank credit. Using a unique sample of majority-owned firms that apply for credit, we show that after a decrease in corporate tax rates the relative-ly poor get easier access to credit. However, this policy also considerably increases loan amounts and decreases loan spreads for the relatively rich. Ultimately, reducing the corporate tax rate pre-dominantly increases the future income and wealth of relatively rich business owners.

Keywords: Corporate taxes; Economic inequality; Bank credit; Credit score (search for similar items in EconPapers)
JEL-codes: D63 G20 G21 H25 (search for similar items in EconPapers)
Date: 2023-02-19
New Economics Papers: this item is included in nep-acc, nep-ban, nep-fdg, nep-pbe and nep-pub
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