Full Citation
Title: Who Benefits from State Corporate Tax Cuts? A Local Labor Markets Approach with Heterogeneous Firms
Citation Type: Journal Article
Publication Year: 2016
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Abstract: This paper estimates the incidence of state corporate taxes on the welfare of workers, landowners, and firm owners using variation in state corporate tax rates and apportionment rules. We develop a spatial equilibrium model with imperfectly mobile firms and workers. Firm owners may earn profits and be inframarginal in their location choices due to differences in - location-specific productivities. We use the - reduced-form effects of tax changes to identify and estimate incidence as well as the structural parameters governing these impacts. In contrast to standard open economy models, firm owners bear roughly 40 percent of the incidence, while workers and landowners bear 30-35 percent and 25-30 percent, respectively.
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Authors: Serrato, Juan Carlos Suarez; Zidar, Owen
Periodical (Full): American Economic Review
Issue: 9
Volume: 106
Pages: 2582-2623
Data Collections: IPUMS USA
Topics: Methodology and Data Collection, Poverty and Welfare
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