Labor and Capital Shares of the Corporate Tax Burden: International Evidence

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This paper develops and applies a simple framework for measuring the incidence of the corporate tax. This framework offers an empirical approach that jointly analyzes the degree to which owners of capital and workers share the burdens of corporate income taxes with the restriction that the overall burden is ultimately shared between them. Data on the foreign activities of American multinational firms provide wage rates and interest rates for a panel of more than 50 countries between 1989 and 2004. Evidence from applying this framework to these data indicates that between and 45 and 75 percent of the burden of corporate taxes is borne by labor with the balance borne by capital. 

mihir-desai-headshot

Mihir Desai's academic publications have appeared in leading economics, finance, and law journals. His work has emphasized the appropriate design of tax policy in a globalized setting, the links between corporate governance and taxation, and the internal capital markets of multinational firms. His research has been cited in The Economist, BusinessWeek, The New York Times, and several other publications.