Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/229574
Authors: 
Bilicka, Katarzyna Anna
Raei, Sepideh
Year of Publication: 
2020
Series/Report no.: 
CESifo Working Paper No. 8756
Abstract: 
We study the distortions to aggregate output created by the differential tax treatment of corporations and pass through entities. We develop an industry equilibrium model in which the legal form of organization is an endogenous choice for firms facing trade off between tax treatment of business income, access to external capital, and the evolution of productivity over time. We match this model to features of the US economy. We find that, relative to the benchmark economy, revenue-neutral tax reform in which legal forms receive the same tax treatments leads to 1.25% increase in the aggregate output.
Subjects: 
output distortions
legal form of organization
pass through
JEL: 
E62
H32
H25
Document Type: 
Working Paper

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