State Taxation and the Reallocation of Business Activity: Evidence from Establishment-Level Data
By Xavier Giroud, Joshua D. Rauh. Journal of Political Economy, 2019
260 citations recorded by the source corpus.
Using census microdata on multistate firms and their organizational forms, we estimate the impact of state taxes on business activity. For C corporations, employment and the number of establishments have short-run corporate tax elasticities of −0.4 to −0.5 and do not vary with changes in personal tax rates. Pass-through entity activities show tax elasticities of −0.2 to −0.4 with respect to personal tax rates and are invariant with respect to corporate tax rates. Capital shows similar patterns. Reallocation of productive resources to other states drives around half the effect. The responses are strongest for firms in tradable and footloose industries.
Subfields: Accounting, Economics and Econometrics
View Paper: https://www.semanticscholar.org/paper/704c15f8d7b2073d3bd1a86b7e035a5976ff20e8
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Citations in the corpus
- Evaluating State and Local Business Tax Incentives (2020, background): “…in this literature might begin with papers from the last few years like Ljungqvist and Smolyansky (2016); Suárez Serrato and Zidar (2016); Fuest, Peichl and Siegloch (2018); Fajgelbaum, Morales, Suárez Serrato and Zidar (2018); Curtis and Decker (2018); Giroud and Rauh (2019); Mast (Forthcoming).”
- Taxation and Innovation in the 20th Century (2018, unknown): “Giroud and Rauh (2017) use establishment-level data to estimate the effects of state taxes on business activity (employment and the number of establishments) and find smaller effects.”