Corporate Minimum Tax and the Elasticity of Taxable Income: Evidence from Administrative Tax Records

A-Tier
Journal: American Economic Journal: Economic Policy
Year: 2025
Volume: 17
Issue: 2
Pages: 358-87

Authors (4)

Jaroslav Bukovina (not in RePEc) Tomáš Lichard (Vysoká Škola Ekonomická v Praz...) Ján Palguta (not in RePEc) Branislav Žúdel (not in RePEc)

Score contribution per author:

1.009 = (α=2.02 / 4 authors) × 2.0x A-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

We examine business responses to a minimum tax (MT) that prescribed fixed floors on corporate tax liability while permitting MT credit carryforwards. Using 2010–2020 tax-return data on all Slovak corporations, we find that many companies immediately relocated from reporting zero taxable income toward bunching at the new floors. We infer the elasticity of taxable income (ETI) to be between 0.33 and 2.28 across value-added tax (VAT) and turnover categories, and quantify the marginal efficiency burden (MEB) of the corporation tax. Given limited extensive-margin responses, our evidence suggests the MT reduced the overall efficiency burden while raising additional tax revenue.

Technical Details

RePEc Handle
repec:aea:aejpol:v:17:y:2025:i:2:p:358-87
Journal Field
General
Author Count
4
Added to Database
2026-01-25