In all the discussion over Apple today, remember that if labor bears the corporate tax, then companies avoiding it may actually end up helping workers. In other words, if workers end up picking up the tab (because capital is mobile/companies leave high corporate tax places), then having a smaller tab can be a good thing. So smaller corporate tax liabilities may be a good thing for those who only care about the welfare of workers (especially in a case in which revenues from the corporate tax are replaced with something like more progressive income taxes or an estate tax). To the extent that corporate taxes are taxes on pure corporate rents, then the story is more complicated and the implications less clear.
So what do we know about who bears the corporate tax? Not enough in my view. Juan Carlos Suarez Serrato and I are currently working on a project on this exact question.
- Here’s Alan Auerbach on what we know about Who Bears the Corporate Tax.
- See Raj Chetty’s slides on tax incidence for more details on how little we know empirically on this issue.