Interactions between corporate and personal taxation – INTERTAX

Most of the activity of modern economies is carried out within corporations, i.e. legal entities that are separate from their owners. Nevertheless, despite this legal separation, companies are owned by individuals. It is essential to take account of these links of ownership and control of companies in order to assess both the effectiveness and the redistributive properties of corporate taxation. For example, the recent sharp reduction in corporate tax rates is likely to be regressive given the concentration of undistributed corporate profits at the top of the income distribution.
Building a complete picture of the redistributive and efficiency implications of corporate taxation therefore requires a better understanding of (1) who owns (directly or not) which companies, (2) how the ownership network and legal forms react to tax policy, and (3) to what extent companies' reactions to corporate tax cuts reflect real changes or shifts between tax bases.
To answer these key questions, this project first aims to build a unique database on the ownership structure of companies. Secondly, the project will mobilise this database, and a set of reforms, to estimate how firms respond to corporate tax cuts. Finally, the project will use this unique data to examine the redistributive implications of the tax strategies of multinational companies and the potential costs of regulations against them.
To do this, it will build on an ongoing research programme conducted by the research team, gathering new data and exploiting reforms little explored in France in order to ultimately develop a unified treatment of corporate and personal taxation.