The Elasticity of Corporate Taxable Income Across Countries

Claudio Agostini; Zareh Asatryan; Laurent Bach; Govindadeva Bernier; Marinho Bertanha; Katarzyna A. Bilicka; Anne Brockmeyer; Jaroslav Bukovina; Guillermo Falcone; Pablo Garriga; Yuxuan He; Petr Janský; Evangelos Koumanakos; Tomáš Lichard; Tomás Martins; Ján Palguta; Elena Patel; João Pereira dos Santos; Louis Perrault; Thomas Schwab; Nathan Seegert; Oliver Škultéty; Kristina Strohmaier; Maximilian Todtenhaupt; Guillermo Vuletin; Branislav Žúdel

doi:10.3386/w34945

The Elasticity of Corporate Taxable Income Across Countries

Claudio Agostini, Zareh Asatryan, Laurent Bach, Govindadeva Bernier, Marinho Bertanha, Katarzyna A. Bilicka, Anne Brockmeyer, Jaroslav Bukovina, Guillermo Falcone, Pablo Garriga, Yuxuan He, Petr Janský, Evangelos Koumanakos, Tomáš Lichard, Tomás Martins, Ján Palguta, Elena Patel, João Pereira dos Santos, Louis Perrault, Thomas Schwab, Nathan Seegert, Oliver Škultéty, Kristina Strohmaier, Maximilian Todtenhaupt, Guillermo Vuletin & Branislav Žúdel

Working Paper 34945

DOI 10.3386/w34945

Issue Date March 2026

Do firms respond similarly to corporate tax incentives across countries? We provide globally comparable estimates of the corporate elasticity of taxable income using administrative tax return data from sixteen countries and a unified empirical framework. Exploiting bunching at a common kink, zero taxable income, we estimate elasticities ranging from 0.08 to 1.9, with an average of 0.79. To explain this heterogeneity, we link elasticities to tax policy, firm characteristics, and country fundamentals. These differences imply that identical corporate tax reforms can generate sharply different revenue effects across countries, leading to substantial heterogeneity in the efficiency costs of corporate taxation.

We thank Kristoffer Berg, Michael Best, Michael Devereux, James Hines, Ben Lockwood, Nathan Hendren, Joel Slemrod, Kate Smith, and Juan Carlos Suarez Serrato. We further thank the participants of the CEPR Public Economics meeting, IIPF, JRC Fiscal Policy Modeling Workshop, Mannheim Taxation, EEA, EPCS Meeting, Czech Economic Society Conference, Slovak Economic Association Meeting, SIEP Conference, Spanish Economic Association Symposium, and seminar participants at Cornell University, CREST, the University of Wisconsin at Madison, SciencesPo, Stanford GSB STAX, Wharton, Northeastern University, Oxford University, Max Planck, IFN Stockholm, CUNEF, and the University of Warsaw. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research. Bertanha acknowledges financial support received while visiting the Department of Economics at Georgetown University. Petr Janský and Oliver Škultéty of Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czechia, acknowledge support from the Czech Science Foundation (MINITAX, 25-15237X).
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Claudio Agostini, Zareh Asatryan, Laurent Bach, Govindadeva Bernier, Marinho Bertanha, Katarzyna A. Bilicka, Anne Brockmeyer, Jaroslav Bukovina, Guillermo Falcone, Pablo Garriga, Yuxuan He, Petr Janský, Evangelos Koumanakos, Tomáš Lichard, Tomás Martins, Ján Palguta, Elena Patel, João Pereira dos Santos, Louis Perrault, Thomas Schwab, Nathan Seegert, Oliver Škultéty, Kristina Strohmaier, Maximilian Todtenhaupt, Guillermo Vuletin, and Branislav Žúdel, "The Elasticity of Corporate Taxable Income Across Countries," NBER Working Paper 34945 (2026), https://doi.org/10.3386/w34945.

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The Elasticity of Corporate Taxable Income Across Countries

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