Figure shows how across the 16 countries in the sample, estimated elasticities range from 0.075 to 1.9, with an average of roughly 0.79. This implies that a 10% increase in the net-of-tax rate raises reported taxable income by around 8% on average. Debates on corporate taxation hinge crucially on how firms respond to changing tax incentives. This column uses administrative tax data from 16 countries and a unified empirical framework to estimate corporate taxable income elasticities. It shows that the responsiveness of corporate taxable income varies widely across economies, and there are large differences in efficiency costs of corporate taxation as well. The differences are linked to tax system design, firm characteristics, and economic fundamentals. The results imply that identical tax reforms can produce very different revenue and efficiency outcomes.
@katarzynabilicka.bsky.social, E Patel & N Seegert show the responsiveness of corporate taxable income varies widely across economies, w/ large differences in efficiency costs of corporate taxation. Identical reforms can produce very different revenue/efficiency outcomes.
ow.ly/gThO50YFtkr
#EconSky
