Working Paper: NBER ID: w9374
Authors: Casey B. Mulligan
Abstract: Aggregate time series data are used to calculate the incidence of capital taxes. Part of the analysis is borrowed from the literature on sales tax incidence, comparing pre-tax interest rates with tax rates. The other part compares tax rates with after-tax interest rates, which are measured separately and independently from pre-tax interest rates. I find a positive correlation between capital tax rates and pre-tax interest rates, and little correlation between after-tax interest rates and tax rates, but both of these findings seem to derive in part from the effect of the business cycle on tax rate measures, as opposed to a shifting of capital taxes. The empirical findings are consistent with significant capital tax shifting in the long run, little shifting in the short run, and clearly rule out over-shifting.
Keywords: No keywords provided
JEL Codes: H22; E22; H30
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Capital Tax Rates (H29) | Pre-Tax Interest Rates (E43) |
| Pre-Tax Interest Rates (E43) | After-Tax Shares (H23) |
| Business Cycle (E32) | Capital Tax Rates (H29) |
| Capital Tax Rates (H29) | After-Tax Interest Rates (E43) |
| Pre-Tax Interest Rates (E43) | Capital Tax Incidence (H22) |