Do Corporate Tax Cuts Increase Income Inequality?

Nallareddy, Suresh; Rouen, Ethan; Serrato, Juan Carlos Suárez

doi:10.3386/w24598

Cited by 36 publications

(9 citation statements)

References 13 publications

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“…An analysis by Nallareddy et al . () across US states highlights a separate channel of influence, whereby corporate tax cuts lead to increasing income inequality, as some top earners shift their income to reduce taxes. This brings out the importance of going beyond conventional measures of direct redistribution among households in assessing the role of taxation.…”

Section: Research On Individual Drivers Of Inequalitymentioning

confidence: 99%

The Drivers of Income Inequality in Rich Countries

Nolan

Richiardi

Valenzuela

2019

Journal of Economic Surveys

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Rising income inequality has recently come centre‐stage as a core societal concern for rich countries. The diagnosis of the forces driving inequality upwards and their relative importance remain hotly contested, notably with respect to the roles of globalization versus technology and of market forces versus institutions and policy choices. This survey provides a critical review and synthesis of recent research. The focus is on income inequality across the entire distribution, rather than only on what has been happening at the very top. We pay particular attention to include what has been learned from the analysis of micro‐data, to ensure that the coverage is not unduly US‐centric and to analyses of the interrelations between the different drivers of inequality. The marked differences in inequality trends across countries and time periods reflect how global economic forces such as globalization and technological change have interacted with differing national contexts and institutions. Major analytical challenges stand in the way of a consensus emerging on the relative importance of different drivers in how income inequality has evolved in recent decades.

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Section: Research On Individual Drivers Of Inequalitymentioning

confidence: 99%

The Drivers of Income Inequality in Rich Countries

Nolan

Richiardi

Valenzuela

2019

Journal of Economic Surveys

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“…Using the variation of tax rates within Germany, Fuest, Peichl and Siegloch () find that low‐skilled, young, and female employees bear a larger share of the tax burden. By contrast, in a recent paper using US state‐level tax rates, Nallareddy, Rouen and Suárez Serrato () find that cuts in tax rates lead to higher reported capital income for top earners, partly because high‐income individuals shift their compensation to avoid taxes.…”

Section: Defining the Tax Basementioning

confidence: 84%

How Should Business Profit Be Taxed? Some Thoughts on Conceptual Developments During the Lifetime of the IFS^*

Devereux

2019

Fiscal Studies

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This paper reviews developments since the 1970s in economic thinking about the design of taxes on business profit. It charts developments from proposals for a cash flow tax from the Meade Committee, to refinements of this in the form of an ‘Allowance for Corporate Equity’ and the levying of the cash flow tax in the country of destination. It describes how the development of international trade and investment has led to ever‐increasing problems in the international tax system with respect to economic efficiency, profit shifting, complexity and tax competition. It also identifies why a response to these problems requires a major reform in the location of taxation.

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“…Based on previous research, the effects of the corporate tax cut could be complementary to our results: concentration of tax savings at the top of the income distribution while negative or no discernible impact for most households. In particular, Nallareddy et al (2018) show that state corporate tax cuts lead to higher income inequality as only households at the top of the income distribution saw an increase in their income. We also do not account for the possibility that farmers might respond to the tax code changes by switching the legal organization of their business from pass‐through entities to C corporations, or vice versa.…”

Section: Resultsmentioning

confidence: 99%

Distributional Impacts of the Tax Cuts and Jobs Act Using Farm Household Microdata

Bawa¹,

Williamson²

2019

Applied Eco Perspectives Pol

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This paper uses ten years of USDA's Agricultural Resource Management Survey data to evaluate the impact of the Tax Cuts and Jobs Act (TCJA). We simulate income tax returns at the household level using the survey's detailed financial and demographic information. We find that farm households in the top 10% of the income distribution realize 71% of the total tax cuts from the TCJA, while families in the bottom 20% of the distribution experience a slight increase in their income tax liabilities. Consequently, the TCJA reduces the progressivity of the tax code, particularly over years with lower farm household income.

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Do Corporate Tax Cuts Increase Income Inequality?

Cited by 36 publications

References 13 publications

The Drivers of Income Inequality in Rich Countries

The Drivers of Income Inequality in Rich Countries

How Should Business Profit Be Taxed? Some Thoughts on Conceptual Developments During the Lifetime of the IFS^*

Distributional Impacts of the Tax Cuts and Jobs Act Using Farm Household Microdata

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Do Corporate Tax Cuts Increase Income Inequality?

Cited by 36 publications

References 13 publications

The Drivers of Income Inequality in Rich Countries

The Drivers of Income Inequality in Rich Countries

How Should Business Profit Be Taxed? Some Thoughts on Conceptual Developments During the Lifetime of the IFS*

Distributional Impacts of the Tax Cuts and Jobs Act Using Farm Household Microdata

Contact Info

Product

Resources

About

How Should Business Profit Be Taxed? Some Thoughts on Conceptual Developments During the Lifetime of the IFS^*