Corporate Tax Rates, Allocative Efficiency, and Aggregate Productivity

• Tác giả: Marcos Dinerstein
• Ngôn ngữ: eng
• Ký hiệu phân loại: 330 Economics
• Thông tin xuất bản: World Bank, Washington, DC, 2023
• Bộ sưu tập: Tài liệu truy cập mở
• ID: 310515
• Chủ đề: 1. CORPORATE TAX IMPACT ON PRODUCTIVITY; 2. CORPORATE TAX RATE; 3. MONOPOLISTIC COMPETITION; 4. PRODUCTIVITY; 5. TAX CODE

Tóm tắt

This paper quantifies the impact of effective corporate tax rates on aggregate total factor productivity. Using Chilean manufacturing data, the paper documents a large dispersion in the effective tax rate faced by firms and a mass of firms facing a 0 percent tax rate. These empirical patterns are incorporated into a standard monopolistic competition model with corporate tax rates. The paper's quantitative findings show that the TFP gains between the economy implied by the Chilean tax code of 1998-2007 and a hypothetical economy without effective corporate tax rate inefficiencies are between 4 and 11 percent. The paper considers counterfactual policies in which all firms face the same tax rate and finds a monotonically decreasing relationship between the level of the tax rate and total factor productivity.