Impact of Corporate Taxes on Industry Employment

Abstract:

This is the first paper to thoroughly investigate the employment effects of corporate taxation at the industry level. Do corporate taxes affect employment rates at the industry level? If they do, then are the effects consistent across all industries? Answering these questions have proved empirically challenging. This paper uses an identification strategy that exploits variation in corporate income tax rates across U.S. states and tries to understand how it impacts industry employment at the county level by focusing on contiguous counties straddling state borders over the period starting from 1990 to 2010. The results show that any change in corporate tax affect employment rate in good producing sector, but employment rate within service sector is only affected by an increase, and not by any decrease, in the corporate tax rates. The paper further presents some interesting findings at a further disaggregation by looking at some of the major economic sectors based on their share of gross domestic product.

The Awkward Truth About CEO Pay

Abstract:

This paper is the first of its kind using the variation in state corporate tax rates to investigate if they have any explanatory power in predicting variations in CEO pay. Specifically, this paper allows us to shed light on whether corporate tax cuts boost CEO pay? This paper, by using a difference-in-difference (DID) set up over the period 1994 to 2015, finds that corporate tax cuts statistically affect CEO pay among all publicly traded firms in the U.S. The magnitude of the effect increases among the S&P 500, S&P 100 and some tax avoiding firms. The paper further presents some interesting findings using three different measures of executive compensation.

Is There Anything Good About The Corporate Tax Cut?

Abstract:

This paper empirically investigate whether the variation in the rate of state corporate taxes across the US economy has any explanatory power in predicting the variation in research and development expenditure across firms. The paper uses an identification strategy that exploits variation in corporate income tax rates across U.S. states and tries to understand how it impacts firm level R&D activity by using a difference-in-difference (DID) set up. Compustat data for all U.S. firms over the period starting from 1994 to 2014 are used to test this hypothesis. The results suggest that corporate tax cuts does not affect R&D expenditures among all publicly traded firms in the U.S. while an increase in the tax rate leads to a decreases in R&D spending.