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The Structure of State Corporate Taxation and its Impact on State Tax Revenues and Economic Activity

Juan Carlos Suárez Serrato, Owen M. Zidar

NBER Working Paper No. 23653
Issued in August 2017, Revised in July 2018
NBER Program(s):The Public Economics Program

This paper documents facts about the state corporate tax structure | tax rates, base rules, and credits | and investigates its consequences for state tax revenue and economic activity. We present three main findings. First, tax base rules and credits explain more of the variation in state corporate tax revenues than tax rates do. Second, although states typically do not offset tax rate changes with base and credit changes, the effects of tax rate changes on tax revenue and economic activity depend on the breadth of the base. Third, as states have narrowed their tax bases, the relationship between tax rates and tax revenues has diminished. Overall, changes in state tax bases have made the state corporate tax system more favorable for corporations and are reducing the extent to which tax rate increases raise corporate tax revenue.

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Document Object Identifier (DOI): 10.3386/w23653

Published: Juan Carlos Suárez Serrato & Owen Zidar, 2018. "The structure of state corporate taxation and its impact on state tax revenues and economic activity," Journal of Public Economics, vol 167, pages 158-176. citation courtesy of

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