The structure of state corporate taxation and its impact on state tax revenues and economic activity

Juan Carlos Suárez Serrato, Owen M. Zidar

Research output: Contribution to journalArticle

2 Citations (Scopus)

Abstract

This paper documents facts about the state corporate tax structure — tax rates, base rules, and credits — and investigates its consequences for state tax revenue and economic activity. We present three main findings. First, tax base rules and credits explain more of the variation in state corporate tax revenues than tax rates do. Second, although states typically do not offset tax rate changes with base and credit changes, the effects of tax rate changes on tax revenue and economic activity depend on the breadth of the base. Third, as states have narrowed their tax bases, the relationship between tax rates and tax revenues has diminished. Overall, changes in state tax bases have made the state corporate tax system more favorable for corporations and are reducing the extent to which tax rate increases raise corporate tax revenue.

Original languageEnglish (US)
Pages (from-to)158-176
Number of pages19
JournalJournal of Public Economics
Volume167
DOIs
StatePublished - Nov 1 2018

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Economic activity
Tax rate
Tax revenues
Corporate taxation
Corporate tax
Tax base
Credit
Tax system
Tax structure

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics
  • Finance

Cite this

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The structure of state corporate taxation and its impact on state tax revenues and economic activity. / Suárez Serrato, Juan Carlos; Zidar, Owen M.

In: Journal of Public Economics, Vol. 167, 01.11.2018, p. 158-176.

Research output: Contribution to journalArticle

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