Wednesday, January 31, 2018
Clemens Fuest (University of Munich), Andreas Peichl (University of Munich) & Sebastian Siegloch (University of Mannheim), Do Higher Corporate Taxes Reduce Wages? Micro Evidence from Germany (2017):
This paper estimates the incidence of corporate taxes on wages using a 20-year panel of German municipalities exploiting 6,800 tax changes for identification. Using event study designs and differences-in-differences models, we find that workers bear about half of the total tax burden. Administrative linked employer-employee data allow us to estimate heterogeneous firm and worker effects. Our findings highlight the importance of labor market institutions and profit-shifting opportunities for the incidence of corporate taxes on wages. Moreover, we show that low-skilled, young and female employees bear a larger share of the tax burden. This has important distributive implications.
(Hat Tip: Ted Seto.)