The Direct Incidence of Corporate Income Tax on Wages

@article{Arulampalam2010TheDI,
  title={The Direct Incidence of Corporate Income Tax on Wages},
  author={Wiji Arulampalam and Michael P. Devereux and Giorgia Maffini},
  journal={Political Economy: Taxation},
  year={2010}
}
We examine the extent to which taxes on corporate income are directly shifted onto the workforce. We use data on 55,082 companies located in nine European countries over the period 1996-2003. We identify this direct shifting through cross-company variation in tax liabilities, conditional on value added per employee. Our central estimate is that the long run elasticity of the wage bill with respect to taxation is -0.093. Evaluated at the mean, this implies that an exogenous rise of $1 in tax… Expand
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