دانلود رایگان مقاله مالیات شرکت و اثرات اضافی مالیات عمودی

Abstract

The empirical aspects of vertical tax externalities have been studied fairly extensively, but with little consensus – a fact that may relate to difficulties in isolating exogenous components in tax setting policy. Adopting the case of the US and using a narrative approach (Romer and Romer 2010), I study the vertical effects of federal tax shocks. I find that vertical tax externalities are modest in their size and are only present in corporate taxation. In particular, I estimate that a $1 billion increase in federal tax revenues reduces total state corporate tax revenues by approximately $27 million. Non-corporate state tax revenues do not seem to be affected by federal tax shocks. Taking a state micro-level approach and using firm-level business activity data, I show that the findings point to the erosion of states’ corporate tax bases.

VI. Conclusion

This paper provides evidence for the magnitude of vertical tax externalities – that is, the influence of federal tax shocks on state tax revenues. I show that vertical tax externalities are present in corporate taxation, while non-corporate taxation does not seem to generate vertical tax externalities. My estimates suggest that a $1 billion increase in federal taxes leads to a $27 million decline in total state corporate tax revenues, or roughly 0.5 million dollars in the average state. I further explore the effect of federal tax shocks by looking at business activity. I show that federal tax shocks reduce firm activity. Finally, I estimate a heterogeneous effect and show that states which offer deductions for federal corporate taxation are not adversely affected by federal tax shocks, and that small states are affected more than large states. The results suggest that corporate taxes create vertical tax externalities: state corporate tax revenues diminish when federal corporate taxes rise. This vertical tax externality is small in magnitude: a 10 billion dollar vertical shock (roughly the sample average) creates only 270 million dollars of externality (roughly 5.4 million dollars for each state), less than 2%. This effect is even smaller if I compare it to state corporate tax revenues: the average state collects roughly 560 million dollars of corporate tax revenues per year, while the average externality amounts to 5.4 million dollars, less than 1%. The small economic magnitude of the estimates is in line with studies which suggest that vertical tax changes have no effect on state tax rates.