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Multi‐Factor Effective Corporate Taxation, Firms’ Mark‐Ups and Tax Incidence: Evidence from OECD Countries
Author(s) -
Barrios Salvador,
Nicodème Gaëtan,
Fuentes A. Jesús Sánchez
Publication year - 2018
Publication title -
fiscal studies
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.63
H-Index - 40
eISSN - 1475-5890
pISSN - 0143-5671
DOI - 10.1111/j.1475-5890.2017.12153
Subject(s) - economics , ranking (information retrieval) , corporate tax , monetary economics , cross country , sample (material) , capital (architecture) , tax incidence , international economics , manufacturing sector , tax reform , value added tax , labour economics , ad valorem tax , macroeconomics , public economics , tax avoidance , history , chemistry , archaeology , chromatography , machine learning , computer science
This paper provides novel evidence on the multi‐factor effective marginal tax rates (EMTRs) for a sample of 17 OECD countries and 11 manufacturing sectors. We use a single framework encompassing capital, labour and energy taxes. Our cross‐country/cross‐sector approach allows us to analyse the contributions of these input factors to the effective tax borne by firms, taking explicitly into account their degree of substitution, their tax incidence and the role of mark‐ups. We find that the labour tax plays a particularly important role in the overall level of the EMTR and that the presence of mark‐ups can significantly alter the levels of the multi‐factor EMTR, although without significantly altering the ranking of countries. We also find that the bulk of the variation in EMTRs is across countries, rather than across sectors (within countries).