Do Higher Corporate Taxes Reduce Wages? Micro Evidence from Germany

Arbeitspapier

This paper estimates the incidence of corporate taxes on wages using a 20-year panel of German municipalities exploiting 6,800 tax changes for identication. Using event study designs and differences-in-differences models, we find that workers bear about half of the total tax burden. Administrative linked employer-employee data allow us to estimate heterogeneous firm and worker effects. Our findings highlight the importace of labor market institutions and profit-shifting opportunities for the incidence of corporate taxes on wages. Moreover, we show that low-skilled, young and female employees bear a larger share of the tax burden. This has important distributive implications.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: ifo Working Paper ; No. 241

Classification and Topics

• Classification: Wirtschaft ; Taxation, Subsidies, and Revenue: General ; State and Local Government; Intergovernmental Relations: General ; Wages, Compensation, and Labor Costs: General
• Subject: business taxation ; incidence ; administrative data ; local taxation

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Fuest, Clemens ; Peichl, Andreas ; Siegloch, Sebastian
• Event: Veröffentlichung
• (who): ifo Institute - Leibniz Institute for Economic Research at the University of Munich
• (where): Munich
• (when): 2017

Further information

• Handle: http://hdl.handle.net/10419/171163
• Last update: 10.03.2025, 11:42 AM CET