Working papers

Abstract: This paper studies the unequal incidence of corporate taxes across firms and its consequences for macroeconomic outcomes. I develop a dynamic general equilibrium Harberger model with heterogeneous firms. I show that corporate tax cuts reallocate resources from labor intensive to capital intensive firms, and that this reallocation reduces the share of the tax burden borne by workers. I confirm the core firm-level mechanisms using French employer-employee data and multiple reforms over the period 2009-2019. I calibrate the model using moments from these same data, and evaluate the short vs. long run, and micro vs. macro impact of corporate tax reforms. Taking firm heterogeneity and general equilibrium dynamics into account, workers bear 14% of the corporate income tax burden. Using estimates from micro-empirical designs that abstract from these two dimensions overestimates this share by more than 30 percentage points.

Work in progress