JEL Codes: G11, H25, H32, J31, and O16.
Keywords: Investment Decisions, Business Taxes and Subsidies, Fiscal Policies and Behavior of Economic Agents: Firms, Wage Level and Structure, sand Saving and Capital Investment.
학회소식
[2022년 5차 CAFM2022]Tax Cuts, Firm Growth, and Worker Earnings: Evidence from Small Businesses in Canada
작성자 : 관리자
조회수 : 1572
게시일 :
2022-12-20
This paper assesses the effects of corporate tax reductions for small businesses on their growth and employee earnings. Following a 2014 reform in Quebec, firms that received tax cuts increase their employment, payrolls, and capital stock by 1.8 percent, 2.4 percent, and 4.4 percent, respectively, relative to unaffected firms. In turn, these firms experience 5.2 percent, 0.4 percentage points, and 891 dollars increases in their sales, profit margins, and EBITDA per worker. Furthermore, annual earnings increase by 1.3 percent for workers in treated firms relative to workers in control firms. Additionally, the effects are larger for firms and workers in high-technology industries, although we do not find different responses based on labor market concentrations. Taken together, these findings suggest that tax incentives specifically designed for small businesses may lead to significant increases in their growth and worker earnings, and targeting a specific sector or industry when designing corporate tax cuts may be an effective way to stimulate growth and employment in the economy.
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