Do Large Companies Have Lower Effective Corporate Tax Rates?
) No 07-001.RS, Working Papers CEB from ULB — Universite Libre de Bruxelles Abstract: The current debate in corporate taxation is focusing on leveling the tax playing field within the European Union for companies operating across-countries. However, tax burdens could also vary with the size of companies within the same country, raising the question whether large companies pay their share of the burden. This paper uses firm-level data for 21 European countries between 1992 and 2004. The paper finds a robust negative correlation between the number of employees and the effective tax burden of companies. This result tends to validate theories arguing that large companies may enjoy a lower tax burden. As a caveat, using total assets as size variable produces a positive relationship. This relationship is however less robust and less economically significant. Keywords: Corporate taxation; Effective tax rates; political power; political cost. (search for similar items in EconPapers) JEL-codes
