American Economic Journal:
Economic Policy
ISSN 1945-7731 (Print) | ISSN 1945-774X (Online)
Corporate Minimum Tax and the Elasticity of Taxable Income: Evidence from Administrative Tax Records
American Economic Journal: Economic Policy
(pp. 358–87)
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.Citation
Bukovina, Jaroslav, Tomáš Lichard, Ján Palguta, and Branislav Žúdel. 2025. "Corporate Minimum Tax and the Elasticity of Taxable Income: Evidence from Administrative Tax Records." American Economic Journal: Economic Policy 17 (2): 358–87. DOI: 10.1257/pol.20230108Additional Materials
JEL Classification
- D22 Firm Behavior: Empirical Analysis
- E62 Fiscal Policy
- H25 Business Taxes and Subsidies including sales and value-added (VAT)
- H32 Fiscal Policies and Behavior of Economic Agents: Firm