Séminaire d'Anthony TERRIAU

Séminaire d'Anthony TERRIAU

Le 4 juin 2024

Le prochain séminaire du GAINS aura lieu le 04 juin 2024 de 10h30 à 12h00 en salle T209.

Anthony TERRIAU (Le Mans Université) présentera "Corporate taxation and firm heterogeneity", co-écrit avec Julien Albertini (Université Lumière Lyon 2) et Xavier Fairise (Le Mans Université).

Abstract:

Some countries have implemented a reduced corporate tax rate for small businesses. In this paper, we assess whether it might be more effective to modulate corporate tax based on both the age and size of firms. We first present empirical evidence of the impact of corporate tax on employment in the United States by comparing contiguous county pairs in neighboring states with different corporate tax rates. We show that corporate tax has a significant and negative effect on employment in small firms and young firms, while there is no evidence of a significant effect for large firms and old firms. When comparing the effect on small versus young firms, our estimates suggest that a one percentage point increase in the state corporate tax rate reduces employment in small (young) firms by 1.35% (4.42%), implying that tax cuts implemented in some countries could be more effective if targeted towards young firms (rather than small firms). We then develop a model of large firms, in which firms differ in terms of age and productivity, to analyze firm dynamics over their life cycle under different tax schedules. We show that our model replicates the main features of the labor market, including the distribution of firms and employment by firm size and age, as well as the response of each type of firm to a corporate tax increase. Finally, we determine the optimal design of corporate tax based on both the size and age of firms. We show that adjusting corporate tax rates can substantially increase employment and welfare without reducing the fiscal surplus.