Do consumers pay the corporate tax?
Martin Jacob, Maximilian A. Müller, Thorben Wulff
Contemporary Accounting Research · 2023 · Volume 40 · Issue 4
Abstract
Using granular gas price data and rich variation in corporate tax rates, we find that corporate taxes increase consumer prices. About 64% of the corporate tax is borne by consumers. The effect is stronger when firms have limited access to tax planning opportunities, face stricter tax enforcement, or when consumer demand is less elastic. Taxes also reduce the number of firms and their scale, consistent with a tax-induced increase in marginal cost. Our results suggest that tax policies that increase effective corporate tax rates may have unintended consequences for consumers through higher prices.
Keywords
corporate tax, tax enforcement, tax incidence, tax planning, tax policy, application des dispositions fiscales, incidence fiscale, impôt sur les sociétés, planification fiscale, politiques fiscales
Enable JavaScript for citation tools and additional paper interactions.