Corporate Taxes and Retail Prices / Scott R. Baker, Stephen Teng Sun, Constantine Yannelis.

Format:

Book

Author/Creator:

Baker, Scott R.

Contributor:

National Bureau of Economic Research.

Sun, Stephen Teng.

Yannelis, Constantine.

Series:

Working Paper Series (National Bureau of Economic Research) no. w27058.

NBER working paper series no. w27058

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2020.

Summary:

Higher corporate taxes must result in lower payments to shareholders, lower wages, or higher product prices. We study the impact of corporate taxes on barcode-level product prices using linked survey and administrative data. Our empirical strategy exploits the dichotomy between the location of production and the location of sales, providing estimates free from confounding local demand shocks. We find significant effects of corporate taxes on prices with a net-of-tax elasticity of 0.24. We find null effects on prices for firms subject to personal income taxes or to full sales apportionment. Approximately half of corporate tax incidence falls on consumers, suggesting that models used by policymakers may significantly underestimate the incidence of corporate taxes on consumers. Pass-through is larger for products purchased by high-income households, higher priced goods, and in less competitive markets.

Notes:

Print version record

April 2020.