The next Economics Seminar of Paris-Saclay will be held on Thursday, November 17, from 12h15 to 13h15. Farid Toubal (LEDa-University Paris-Dauphine-PSL) will present his paper “Corporate Tax Avoidance and Sales: Micro Evidence and Aggregate Implications“, co-authored with Julien Martin and Mathieu Parenti.

Abstract: This paper investigates the influence of corporate tax avoidance (CTA) on firm-level sales and its aggregate implications. CTA gives a competitive advantage to avoiding firms, which affects the distribution of sales in the economy. We find a causal impact of CTA on sales in US firm-level data. CTA increased more among the largest firms, which has reinforced their dominant position. A quantitative exercise reveals that the strength of CTA in shaping changes in the distribution of sales varies across industries. Changes in tax avoidance of large relative to small firms explain about 15% of the variation of concentration across US industries between 1994 and 2017. Further analysis shows the impact of CTA-induced distortions on industrial output is relevant at a macroeconomic scale.

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