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Who Benefits from State Corporate Tax Cuts? A Local Labor Market Approach with Heterogeneous Firms: Further Results

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  • Juan Carlos Suárez Serrato
  • Owen Zidar

Abstract

This paper estimates state corporate tax incidence using new data and methods for estimating the effects on profits. Extending Suárez Serrato and Zidar (2016), we develop two identification approaches that use the effects on incumbent firm labor demand and local productivity. We estimate these effects using data from census, show how they identify parameters, and provide incidence estimates using reduced-form and structural approaches. Across these approaches, we find that owners bear a substantial portion of incidence. Our central estimate is that firm owners bear half of the incidence, while workers and landowners bear 25–40 percent and 10–15 percent, respectively.

Suggested Citation

  • Juan Carlos Suárez Serrato & Owen Zidar, 2024. "Who Benefits from State Corporate Tax Cuts? A Local Labor Market Approach with Heterogeneous Firms: Further Results," AEA Papers and Proceedings, American Economic Association, vol. 114, pages 358-363, May.
    • Handle: RePEc:aea:apandp:v:114:y:2024:p:358-63
    DOI: 10.1257/pandp.20241097
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    1. Juan Carlos Suárez Serrato & Owen M. Zidar, 2023. "Who Benefits from State Corporate Tax Cuts? A Local Labor Market Approach with Heterogeneous Firms: Further Results," NBER Working Papers 31206, National Bureau of Economic Research, Inc.
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      More about this item

      JEL classification:

      • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
      • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
      • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
      • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
      • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
      • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
      • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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