Three Essays on Business Taxation
Bibliographic record
Abstract
This thesis contains three essays on the design of business income taxation and its effects on labor market outcomes. Given the existence of informal sector activities, especially in developing countries, and the highly regressive nature of the fixed costs of registering and complying with taxation, the first two chapters, provide theoretical frameworks for designing welfare-maximizing tax systems in countries where informal activities are pervasive. The third chapter studies the causal effects of corporate income tax on wages and hours of employment using the 2001-2004 federal tax reform in Canada as a natural quasi-experiment. In Chapter 1, we construct a simple model where a turnover threshold separates firms paying standard corporate income tax from firms (below the threshold) who pay a tax on their sales (turnover). Thus, closed-form solutions are derived for the optimal threshold, in terms of the standard corporate income tax rate and the turnover tax rate; and closed-form solutions are derived for the optimal turnover tax rate as a function of the threshold. Chapter 2 extends the simple model from Chapter 1 by endogenizing firms' sales levels through their input choices. We analyze a model where entrepreneurs allocate labor to the formal and informal sectors. Formal sector income is subjected either to a corporate income tax or a tax on turnover, depending on whether their turnover exceeds a threshold. Given private behavior, social welfare is optimized. We interpret the first-order conditions for welfare maximization to identify the key margins and then simulate a calibrated version of the model. Chapter 3 studies the labor market effects of the corporate income tax by exploiting a 2001-2004 federal tax reform in Canada. This reform lowered the federal statutory corporate income tax rate by 25% (i.e., from 28% to 21%) in the sectors which were not previously under special tax treatment. Results from difference-in-differences regressions suggest that workers benefited significantly from tax reduction. Consistent with Griliches' capital-skill complementary hypothesis, this paper finds that high-educated workers benefited more from the reform compared with medium-educated or low-educated workers.
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How this classification was reachedexpand
Full frame machine prediction
Teacher imitationNot calibrated prevalence, not ground truth. Human validation pending. The Gemma side is a direct model label for every work in the frame, read from the title-only record. The Codex side is a classifier learned from the 10,348 direct Codex labels and calibrated to design-weighted sample rates; fields without enough sample support carry no Codex call. Candidate is the union of the two sides; consensus is their intersection. These outputs are machine_predicted_unvalidated and are not human labels.
Distilled classifier scores by category (both heads)
| Category | Codex | Gemma |
|---|---|---|
| Metaresearch | 0.003 | 0.011 |
| Meta-epidemiology (narrow) | 0.001 | 0.000 |
| Meta-epidemiology (broad) | 0.001 | 0.001 |
| Bibliometrics | 0.001 | 0.001 |
| Science and technology studies | 0.002 | 0.005 |
| Scholarly communication | 0.004 | 0.004 |
| Open science | 0.001 | 0.002 |
| Research integrity | 0.003 | 0.005 |
| Insufficient payload (model declined to judge) | 0.013 | 0.004 |
Machine scores (provisional)
The two teacher heads of the student model, read on this work. A score orders the frame for review; it never asserts a category, and the validation status ships verbatim with every row.
Baseline scores from an immature model (maturity gate not passed, 7 training rounds). Scores rank; they never assert a category.
score_only:v0-immature-baseline · verbatim from the scoring run: score_only means the number may rank works, and no category label ships from itClassification
machine, unvalidatedMachine predicted; a candidate call from one source (direct Gemma or distilled Codex), not a consensus.
How this classification was reached, model by model and score by score, is at the end of the page under "How this classification was reached".