Effective Corporate Tax Rates and the Size Distribution of Firms

Almas Heshmati (), Dan Johansson and Carl Magnus Bjuggren

No 200923, TEMEP Discussion Papers from Seoul National University; Technology Management, Economics, and Policy Program (TEMEP)

Abstract: We analyze the effects of effective corporate tax rates on the size distribution of firms. In modelling this relationship we account for conditional variables as well as unobservable time and industry effects. A number of hypotheses are tested concerning heterogeneity in the impact of effective corporate tax rates on the size distributions of firms with regard to firm size class, industry and time. The results are based on data covering the whole Swedish economy for the period 1973-2002. The descriptive results suggest that effective corporate tax rates differ by firm size, industry and over time. Application of t-tests demonstrate inequality in mean and variance of effective corporate tax rates between major size classes but not within major size classes: smaller firms report a higher effective corporate tax rate than larger firms. The t-tests also demonstrate inequality in mean and variance of effective corporate tax rates between industrial sectors: service sector reports a higher effective corporate tax rate than production sector. The regressions show effective corporate tax rates to have: a negative effect on the size distribution of large firms, negative effect on transportation, financing and service sector and a positive effect on manufacturing, electricity and on production sector. We conclude that effective corporate tax rates affect the size distribution of firms as well as the composition of industries.

Keywords: composition of industries; corporate taxes; effective corporate tax rates; size distribution of firms (search for similar items in EconPapers)
JEL-codes: D21 H25 H32 L11 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2009-10, Revised 2009-11
New Economics Papers: this item is included in nep-acc
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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http://temep-repec.my-groups.de/DP-23.pdf First version, 2009 (application/pdf)

Related works:
Journal Article: Effective Corporate Tax Rates and the Size Distribution of Firms (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:snv:dp2009:200923

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