To Cut or Not to Cut? On the Impact of Corporate Taxes on Employment and Income /
Ljungqvist, Alexander.
To Cut or Not to Cut? On the Impact of Corporate Taxes on Employment and Income / Alexander Ljungqvist, Michael Smolyansky. - Cambridge, Mass. National Bureau of Economic Research 2014. - 1 online resource: illustrations (black and white); - NBER working paper series no. w20753 . - Working Paper Series (National Bureau of Economic Research) no. w20753. .
December 2014.
Do corporate tax increases destroy jobs? And do corporate tax cuts boost employment? Answering these questions has proved empirically challenging. We propose an identification strategy that exploits variation in corporate income tax rates across U.S. states. Comparing contiguous counties straddling state borders over the period 1970 to 2010, we find that increases in corporate tax rates lead to significant reductions in employment and wage income, while corporate tax cuts only boost economic activity if implemented during recessions. Our spatial-discontinuity approach permits a causal interpretation of these findings by both establishing a plausible counterfactual and overcoming biases resulting from the fact that tax changes are often prompted by changes in economic conditions.
System requirements: Adobe [Acrobat] Reader required for PDF files.
Mode of access: World Wide Web.
To Cut or Not to Cut? On the Impact of Corporate Taxes on Employment and Income / Alexander Ljungqvist, Michael Smolyansky. - Cambridge, Mass. National Bureau of Economic Research 2014. - 1 online resource: illustrations (black and white); - NBER working paper series no. w20753 . - Working Paper Series (National Bureau of Economic Research) no. w20753. .
December 2014.
Do corporate tax increases destroy jobs? And do corporate tax cuts boost employment? Answering these questions has proved empirically challenging. We propose an identification strategy that exploits variation in corporate income tax rates across U.S. states. Comparing contiguous counties straddling state borders over the period 1970 to 2010, we find that increases in corporate tax rates lead to significant reductions in employment and wage income, while corporate tax cuts only boost economic activity if implemented during recessions. Our spatial-discontinuity approach permits a causal interpretation of these findings by both establishing a plausible counterfactual and overcoming biases resulting from the fact that tax changes are often prompted by changes in economic conditions.
System requirements: Adobe [Acrobat] Reader required for PDF files.
Mode of access: World Wide Web.