Do Large Companies Have Lower Effective Corporate Tax Rates? A European Survey

Gaëtan Nicodème

No 07-001.RS, Working Papers CEB from ULB -- Universite Libre de Bruxelles

Abstract: The current debate in corporate taxation is focusing on leveling the tax playing field within the European Union for companies operating across-countries. However, tax burdens could also vary with the size of companies within the same country, raising the question whether large companies pay their share of the burden. This paper uses firm-level data for 21 European countries between 1992 and 2004. The paper finds a robust negative correlation between the number of employees and the effective tax burden of companies. This result tends to validate theories arguing that large companies may enjoy a lower tax burden. As a caveat, using total assets as size variable produces a positive relationship. This relationship is however less robust and less economically significant.

Keywords: Corporate taxation; Effective tax rates; political power; political cost. (search for similar items in EconPapers)
JEL-codes: E61 H21 H22 (search for similar items in EconPapers)
Pages: 33 p.
Date: 2007
New Economics Papers: this item is included in nep-bec, nep-eec and nep-pbe
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Citations: View citations in EconPapers (8)

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