Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/174328
Authors: 
Bauer, Thomas K
Siemers, Lars-Hinrich R.
Year of Publication: 
2017
Series/Report no.: 
Joint Discussion Paper Series in Economics 32-2017
Abstract: 
Empirical evidence on the degree of business-tax shifting is rare. It remains open to which extent the tax burden is shifted, whether there are differences for tax increases and decreases, or whether there exists some treatment heterogeneity. Using a large administrative panel data set, we exploit the regional variation of the German business-income taxation and find that 65% to at most 93% is shifted to labour through real wage adjustments. We find that business taxation increases wage inequality significantly. Workers in a weak labour-market position bear the highest part of business taxation. The incidence effect of tax reliefs is significantly higher than that of tax increases. Therefore, reducing business taxes might, surprisingly, effectively reduce inequality.
Subjects: 
tax incidence
profit taxation
wages
inequality
asymmetric effects
JEL: 
H22
H25
H32
J31
J38
Document Type: 
Working Paper

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