How Responsive are Firms to the Corporate Wealth Tax?

The corporate wealth tax is commonly associated with a non-optimal policy for fiscal revenue and efficiency. However, there is no empirical evidence regarding the behavioral response of firms to this tax. Taking advantage of the non-linearities introduced by the tax design in Colombia, this paper es...

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Autores:
Gómez, Camilo
Tipo de recurso:
Work document
Fecha de publicación:
2019
Institución:
Universidad de los Andes
Repositorio:
Séneca: repositorio Uniandes
Idioma:
spa
OAI Identifier:
oai:repositorio.uniandes.edu.co:1992/41099
Acceso en línea:
http://hdl.handle.net/1992/41099
Palabra clave:
Corporate wealth tax
wealth tax base elasticity
Colombia
H25, H26, H32, D22
Rights
openAccess
License
http://creativecommons.org/licenses/by-nc-nd/4.0/
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spelling Al consultar y hacer uso de este recurso, está aceptando las condiciones de uso establecidas por los autores.http://creativecommons.org/licenses/by-nc-nd/4.0/info:eu-repo/semantics/openAccesshttp://purl.org/coar/access_right/c_abf2Gómez, Camiloa14c5545-96a7-490d-b141-cb2e6ac2fd6b4002020-07-28T17:16:17Z2020-07-28T17:16:17Z20191657-5334http://hdl.handle.net/1992/410991657-719110.57784/1992/41099instname:Universidad de los Andesreponame:Repositorio Institucional Sénecarepourl:https://repositorio.uniandes.edu.co/The corporate wealth tax is commonly associated with a non-optimal policy for fiscal revenue and efficiency. However, there is no empirical evidence regarding the behavioral response of firms to this tax. Taking advantage of the non-linearities introduced by the tax design in Colombia, this paper estimates the elasticity of corporate wealth with respect to the statutory tax rate and investigates the impact of the tax on reported assets, profits, and liabilities. Results reveal that, in years 2006 and 2010, we observe between 23.8% and 35.7% more firms at the wealth cutoffs where the tax rate changes. This implies estimated elasticities of 0.250 and 0.447 for firms with wealth around 3 billion pesos. Difference-in-differences analysis suggests that the reduction in reported wealth relates mostly to declines in assets and pre-tax profits, while no effects on liabilities are found. Absent fiscal externalities, the estimated elasticities are associated with a revenue loss and marginal deadweight loss of around 1% of fiscal revenue on the evaluated taxpayer firms. Once the negative impact on the corporate income tax is considered, these figures can be as high as 3.8%.39 páginasspaUniversidad de los Andes, Facultad de Economía, CEDEDocumentos CEDE No. 35 Septiembre de 2019https://ideas.repec.org/p/col/000089/017433.htmlHow Responsive are Firms to the Corporate Wealth Tax?Documento de trabajoinfo:eu-repo/semantics/workingPaperhttp://purl.org/coar/resource_type/c_8042http://purl.org/coar/version/c_970fb48d4fbd8a85Texthttps://purl.org/redcol/resource_type/WPCorporate wealth taxwealth tax base elasticityColombiaH25, H26, H32, D22Facultad de EconomíaPublicationTHUMBNAILdcede2019-35.pdf.jpgdcede2019-35.pdf.jpgIM Thumbnailimage/jpeg9703https://repositorio.uniandes.edu.co/bitstreams/874ec288-944b-4b11-a5ba-0359caa065cb/downloada7359e98afb940d7cbe7c3eb99c881fdMD56ORIGINALdcede2019-35.pdfdcede2019-35.pdfapplication/pdf948767https://repositorio.uniandes.edu.co/bitstreams/446a00c0-11f7-4385-88b4-33f683bfc3a6/download7f20fa94fda3a0be13819ed2b1af1936MD53TEXTdcede2019-35.pdf.txtdcede2019-35.pdf.txtExtracted texttext/plain89895https://repositorio.uniandes.edu.co/bitstreams/c7e959e3-d804-481f-8f00-afe45268443f/downloade83109a742a58fafac21525becd07d6eMD551992/41099oai:repositorio.uniandes.edu.co:1992/410992024-06-04 15:30:15.423http://creativecommons.org/licenses/by-nc-nd/4.0/open.accesshttps://repositorio.uniandes.edu.coRepositorio institucional Sénecaadminrepositorio@uniandes.edu.co
dc.title.none.fl_str_mv How Responsive are Firms to the Corporate Wealth Tax?
title How Responsive are Firms to the Corporate Wealth Tax?
spellingShingle How Responsive are Firms to the Corporate Wealth Tax?
Corporate wealth tax
wealth tax base elasticity
Colombia
H25, H26, H32, D22
title_short How Responsive are Firms to the Corporate Wealth Tax?
title_full How Responsive are Firms to the Corporate Wealth Tax?
title_fullStr How Responsive are Firms to the Corporate Wealth Tax?
title_full_unstemmed How Responsive are Firms to the Corporate Wealth Tax?
title_sort How Responsive are Firms to the Corporate Wealth Tax?
dc.creator.fl_str_mv Gómez, Camilo
dc.contributor.author.none.fl_str_mv Gómez, Camilo
dc.subject.keyword.none.fl_str_mv Corporate wealth tax
wealth tax base elasticity
Colombia
topic Corporate wealth tax
wealth tax base elasticity
Colombia
H25, H26, H32, D22
dc.subject.jel.none.fl_str_mv H25, H26, H32, D22
description The corporate wealth tax is commonly associated with a non-optimal policy for fiscal revenue and efficiency. However, there is no empirical evidence regarding the behavioral response of firms to this tax. Taking advantage of the non-linearities introduced by the tax design in Colombia, this paper estimates the elasticity of corporate wealth with respect to the statutory tax rate and investigates the impact of the tax on reported assets, profits, and liabilities. Results reveal that, in years 2006 and 2010, we observe between 23.8% and 35.7% more firms at the wealth cutoffs where the tax rate changes. This implies estimated elasticities of 0.250 and 0.447 for firms with wealth around 3 billion pesos. Difference-in-differences analysis suggests that the reduction in reported wealth relates mostly to declines in assets and pre-tax profits, while no effects on liabilities are found. Absent fiscal externalities, the estimated elasticities are associated with a revenue loss and marginal deadweight loss of around 1% of fiscal revenue on the evaluated taxpayer firms. Once the negative impact on the corporate income tax is considered, these figures can be as high as 3.8%.
publishDate 2019
dc.date.issued.none.fl_str_mv 2019
dc.date.accessioned.none.fl_str_mv 2020-07-28T17:16:17Z
dc.date.available.none.fl_str_mv 2020-07-28T17:16:17Z
dc.type.spa.fl_str_mv Documento de trabajo
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dc.identifier.doi.none.fl_str_mv 10.57784/1992/41099
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url http://hdl.handle.net/1992/41099
dc.language.iso.none.fl_str_mv spa
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dc.relation.ispartofseries.none.fl_str_mv Documentos CEDE No. 35 Septiembre de 2019
dc.relation.repec.spa.fl_str_mv https://ideas.repec.org/p/col/000089/017433.html
dc.rights.uri.*.fl_str_mv http://creativecommons.org/licenses/by-nc-nd/4.0/
dc.rights.accessrights.spa.fl_str_mv info:eu-repo/semantics/openAccess
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http://purl.org/coar/access_right/c_abf2
eu_rights_str_mv openAccess
dc.format.extent.none.fl_str_mv 39 páginas
dc.publisher.none.fl_str_mv Universidad de los Andes, Facultad de Economía, CEDE
publisher.none.fl_str_mv Universidad de los Andes, Facultad de Economía, CEDE
institution Universidad de los Andes
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