Business Taxation in an Emerging Economy: Analysing Corporate Tax Incidence

Agarwal, Samiksha and Chakraborty, Lekha (2019): Business Taxation in an Emerging Economy: Analysing Corporate Tax Incidence. Forthcoming in:

Abstract

This paper estimates the incidence of corporate taxes in an emerging economy –India- using the data from 5,666 business firms listed in the Bombay Stock Exchange (BSE) and the National Stock Exchange of India (NSE) for the period 2000-15. Using the dynamic panel models, we find that capital bear the burden of corporate taxation relatively more than the labour. Our findings highlight that the burden of corporate tax is more on capital than labour. It is also found that the effective tax rate is higher for the small corporate firms than the gigantic firms. Further research is required to understand whether less incidence of corporate taxation on wages in India is due to profit shifting.

• Item Type: MPRA Paper
• Language: English
• Keywords: corporate tax incidence, dynamic panel, factor mobility, labour, capital, business taxation
• Subjects: E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook; H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H22 - Incidence

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