Munich Personal RePEc Archive

Corporate Taxes and Economic Inequality: A Credit Channel

Delis, Manthos and Galariotis, Emilios and Iosifidi, Maria and Ongena, Steven (2023): Corporate Taxes and Economic Inequality: A Credit Channel.

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Corporate taxation can have redistributive effects on income and wealth. We hypothesize and empirically establish such an effect working via bank credit. Using a unique sample of majority-owned firms that apply for credit, we show that after a decrease in corporate tax rates the relative-ly poor get easier access to credit. However, this policy also considerably increases loan amounts and decreases loan spreads for the relatively rich. Ultimately, reducing the corporate tax rate pre-dominantly increases the future income and wealth of relatively rich business owners.

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