IDEAS home Printed from https://ideas.repec.org/a/jfr/rwe111/v4y2013i1p14-21.html
   My bibliography  Save this article

The U.S. Corporate Tax Reform and Its Macroeconomic Outcomes

Author

Listed:
  • Nahid Kalbasi Anaraki

Abstract

The corporate tax reform has been among the most controversial issues during the past U.S. presidential debates. Though much has been said about the adverse macroeconomic effects of the corporate tax hike, less attention has been paid to the magnitude of such effects. This study attempts to measure the adverse effects of the corporate tax hike on macroeconomic variables such as investment, real GDP, productivity growth, hourly wages, unemployment rate, natural rate of unemployment, and consumer price index (CPI). The estimated regression results with quarterly data from1960 to 2010suggest that a 10% increase in the effective corporate tax rate reduces private investment by3.1%, real GDP by 1.5%, productivity by 2.6%, and hourly wages by 4%. The results also indicate that this increase in the effective corporate tax rate raises short-term unemployment rate by 0.5%, the natural rate of unemployment by 1%, and the consumer price index (CPI) by 0.9%.

Suggested Citation

  • Nahid Kalbasi Anaraki, 2013. "The U.S. Corporate Tax Reform and Its Macroeconomic Outcomes," Research in World Economy, Research in World Economy, Sciedu Press, vol. 4(1), pages 14-21, March.
    • Handle: RePEc:jfr:rwe111:v:4:y:2013:i:1:p:14-21
    as

    Download full text from publisher

    File URL: http://www.sciedu.ca/journal/index.php/rwe/article/view/2545/1422
    Download Restriction: no
    File URL: http://www.sciedu.ca/journal/index.php/rwe/article/view/2545
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. N. Gregory Mankiw, 1985. "Small Menu Costs and Large Business Cycles: A Macroeconomic Model of Monopoly," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 100(2), pages 529-538.
    2. Christina D. Romer & David H. Romer, 2010. "The Macroeconomic Effects of Tax Changes: Estimates Based on a New Measure of Fiscal Shocks," American Economic Review, American Economic Association, vol. 100(3), pages 763-801, June.
    3. O. Ashenfelter & D. Card (ed.), 1999. "Handbook of Labor Economics," Handbook of Labor Economics, Elsevier, edition 1, volume 3, number 3.
    4. R. Vergara, 2010. "Taxation and private investment: evidence for Chile," Applied Economics, Taylor & Francis Journals, vol. 42(6), pages 717-725.
    5. Card, David, 1999. "The causal effect of education on earnings," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 30, pages 1801-1863, Elsevier.
    6. Engen, Eric M. & Skinner, Jonathan, 1996. "Taxation and Economic Growth," National Tax Journal, National Tax Association;National Tax Journal, vol. 49(4), pages 617-642, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Kristinn Hermannsson & Patrizio Lecca, 2016. "Human Capital in Economic Development: From Labour Productivity to Macroeconomic Impact," Economic Papers, The Economic Society of Australia, vol. 35(1), pages 24-36, March.
    2. María Arrazola & José de Hevia, 2003. "Evaluación económica de políticas educativas: Una ilustración con la Ley General de la Educación de 1970," Hacienda Pública Española / Review of Public Economics, IEF, vol. 164(1), pages 111-127, march.
    3. Kemptner, Daniel & Tolan, Songül, 2018. "The role of time preferences in educational decision making," Economics of Education Review, Elsevier, vol. 67(C), pages 25-39.
    4. Grossmann, Volker, 2008. "Risky human capital investment, income distribution, and macroeconomic dynamics," Journal of Macroeconomics, Elsevier, vol. 30(1), pages 19-42, March.
    5. Campos, Nauro F. & Jolliffe, Dean, 2003. "After, before and during: returns to education in Hungary (1986-1998)," Economic Systems, Elsevier, vol. 27(4), pages 377-390, December.
    6. Emanuela di Gropello, 2006. "Meeting the Challenges of Secondary Education in Latin America and East Asia : Improving Efficiency and Resource Mobilization," World Bank Publications - Books, The World Bank Group, number 7173, December.
    7. Bas Jacobs, 2013. "Optimal redistributive tax and education policies in general equilibrium," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 20(2), pages 312-337, April.
    8. David Campbell, 2001. "Rates of Return to Schooling and the Quality of Education in England and Wales," Studies in Economics 0115, School of Economics, University of Kent.
    9. Huong Thu Le & Ha Trong Nguyen, 2018. "The evolution of the gender test score gap through seventh grade: new insights from Australia using unconditional quantile regression and decomposition," IZA Journal of Labor Economics, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 7(1), pages 1-42, December.
    10. Martin Schlotter & Guido Schwerdt & Ludger Woessmann, 2011. "Econometric methods for causal evaluation of education policies and practices: a non-technical guide," Education Economics, Taylor & Francis Journals, vol. 19(2), pages 109-137.
    11. Peydró, José-Luis & Jasova, Martina & Mendicino, Caterina & Panetti, Ettore & Supera, Dominik, 2021. "Monetary Policy, Labor Income Redistribution and the Credit Channel: Evidence from Matched Employer-Employee and Credit Registe," CEPR Discussion Papers 16549, C.E.P.R. Discussion Papers.
    12. Kai Barron & Luis F. Gamboa & Paul Rodríguez-Lesmes, 2019. "Behavioural Response to a Sudden Health Risk: Dengue and Educational Outcomes in Colombia," Journal of Development Studies, Taylor & Francis Journals, vol. 55(4), pages 620-644, April.
    13. María laura Alzúa & Guillermo Cruces & Carolina Lopez, 2016. "Long-Run Effects Of Youth Training Programs: Experimental Evidence From Argentina," Economic Inquiry, Western Economic Association International, vol. 54(4), pages 1839-1859, October.
    14. Carstensen Kai & Hartmann Susanne & Gundlach Erich, 2009. "The Augmented Solow Model with Mincerian Schooling and Externalities," German Economic Review, De Gruyter, vol. 10(4), pages 448-463, December.
    15. Alan B. Krueger, 2002. "Inequality, Too Much of a Good Thing," Working Papers 845, Princeton University, Department of Economics, Industrial Relations Section..
    16. Alfò, Marco & Carbonari, Lorenzo & Trovato, Giovanni, 2023. "On the effects of taxation on growth: an empirical assessment," Macroeconomic Dynamics, Cambridge University Press, vol. 27(5), pages 1289-1318, July.
    17. Uta Bolt & Eric French & Jamie Hentall-MacCuish & Cormac O'Dea, 2021. "The intergenerational elasticity of earnings: exploring the mechanisms," IFS Working Papers W21/07, Institute for Fiscal Studies.
    18. Athanasoglou, Panayiotis P. & Georgiou, Evangelia A. & Staikouras, Christos C., 2009. "Assessing output and productivity growth in the banking industry," The Quarterly Review of Economics and Finance, Elsevier, vol. 49(4), pages 1317-1340, November.
    19. Francisco Queiró, 2022. "Entrepreneurial Human Capital and Firm Dynamics [How Large Are Human-Capital Externalities? Evidence from Compulsory Schooling Laws]," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 89(4), pages 2061-2100.
    20. Lechner, Michael & Sari, Nazmi, 2015. "Labor market effects of sports and exercise: Evidence from Canadian panel data," Labour Economics, Elsevier, vol. 35(C), pages 1-15.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:jfr:rwe111:v:4:y:2013:i:1:p:14-21. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Gina Perry (email available below). General contact details of provider: http://rwe.sciedupress.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.