Working Papers

Effective Tax Rates and Firm Size (Submitted)
(with Pierre Bachas, Anne Brockmeyer and Roel Dom)

Presented at the 4th World Bank Tax Conference (Video), the 2022 Annual Congress of the IIPF, and the PSE workshop in International Trade. Coverage from UCL Stone Centre. Replication code here.

This paper provides novel evidence on the relationship between firm size and effective corporate tax rates, using full-population administrative tax data from 13 countries. In all countries, small firms face lower effective corporate tax rates than mid-sized firms due to reduced statutory tax rates and a higher propensity to register losses. In most countries, effective corporate tax rates fall for the largest firms due to the take-up of tax incentives. As a result, a third of the top 1 percent of firms face effective corporate tax rates below the global minimum tax of 15 percent. The minimum tax could raise corporate tax revenue by 27 percent in the median sample country.

The Impact of COVID-19 on Formal Firms: Micro Tax Data Simulations across Countries
(with Pierre Bachas, Anne Brockmeyer)

Presented at the 2021 Annual Congress of the IIPF. Coverage from the Economics Observatory and UCL Stone Centre. Replication code here.

[We are currently updating the paper to compare our simulations to the realized impact of COVID-19]. How is the COVID-19 pandemic affecting firm profits and tax payments in developing countries? This paper uses administrative corporate tax records from 10 low- and middle-income countries around the world to provide plausible estimates. Modeling the lockdown-triggered revenue shock with simple and transparent assumptions, the analysis predicts that less than half of all firms will remain profitable by the end of 2020, about 5–10 percent of the formal aggregate annual payroll will be lost, and firm exit rates will double. As a result, it is expected that tax revenue remitted by the corporate sector will fall by at least 1.5 percent of baseline gross domestic product. Differences in sectoral composition and firms’ cost structures generate heterogeneity in the results across countries: wage subsidies are less effective in low-income countries and government revenue losses are smaller.

Work in Progress

Corporate Taxes and Economic Activity at Home and Abroad
(with Sarah Clifford and Jakob Miethe)