Corporate tax cuts can grow the economic pie, but almost all of the extra slices go to the richest. Case in point: recent US corporate cuts did increase earnings, but 87% of private income gains went to the top 10%. Great new paper: bsky.app/profile/aeaj...
Zorka Milin
Forthcoming in the AER: "Corporate Tax Cuts, Firm Growth, and Workers’ Earnings" by Patrick J. Kennedy, Christine L. Dobridge, Paul Landefeld, and Jacob Mortenson.
(Forthcoming Article) - We study the effects of the largest corporate income tax cut in U.S. history on firms and
workers. To identify causal effects, we use employer-employee matched tax records and event
studies comparing similarly sized firms in the same industry that faced divergent tax changes
due to their pre-existing legal status. Tax cuts cause increases in firms’ investment, sales, profits,
employment, and payrolls, with earnings gains concentrated among highly paid workers. In
the short-run, 87% of private income gains flow to the top 10% of the income distribution.
