« Corporate Taxation, Prices and Inequality »

Abstract :
This paper studies the incidence of corporate taxation on large firms. Using an exceptional tax targeting large firms, quasi-experimental variation, and linked administrative firm-level data, we study the impact of corporate taxation on input use, input price and output price. We find that the incidence of the corporate tax on output prices is at least as important as the incidence of the corporate tax on wages. While this additional margin of adjustment alleviates the corporate tax burden borne by firms’ owners, we show that the corporate income tax remains largely progressive.