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Title: Passing It On: The Incidence of the Corporate Income Tax under Imperfect Competition

Citation Type: Miscellaneous

Publication Year: 2009

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Abstract: We model and estimate the extent to which the corporate income tax aects worker?swages under imperfect competition. We construct our dataset on individual and industrycharacteristics using the Current Population Survey and Commerce Department data forthe years 1982, 1992 and 1997. Identi?cation comes from variation in the eective tax ratesacross industry and time. Our empirical results suggest that labor shares the burden ofcorporate taxes. Consistent with our theoretical prediction, the shifting of the tax to laborintensi?es with the degree of market concentration. Accounting for the eect of imperfectcompetition measured by the concentration ratio, a ten percent increase in the marginaleective corporate tax rate decreases weekly wages by 0:048 percent. We further providesome direct evidence that labor shares a signi?cant portion of the corporate income taxburden.0

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Authors: Liu, Li

Publisher: Rutgets University

Data Collections: IPUMS CPS

Topics: Other

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