Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/325041 
Year of Publication: 
2025
Series/Report no.: 
IZA Discussion Papers No. 17983
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
We provide novel evidence on the incidence of business taxes using comprehensive survey and experimental data from German firms. Leveraging randomized variation in hypothetical tax changes, we find that the incidence of profit taxes is highly asymmetric. Tax decreases are more likely to benefit workers and stimulate investment, whereas tax increases tend to be passed on to consumers through higher prices and absorbed by firm owners through reduced profit distributions. Moreover, by varying the magnitude of the tax changes, we demonstrate that worker incidence increases with the absolute size of the tax change, partially offsetting the burden on firm owners.
Subjects: 
investment
firm behavior
tax incidence
corporate tax
payout
wages
JEL: 
D22
H00
H22
H25
J23
J30
Document Type: 
Working Paper

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