No. 15: Do Consumers Pay The Corporate Tax?


We examine whether consumers bear corporate taxes through higher prices. Using data on the gas prices of German gas stations and local variation in business tax rates, we find that higher business taxes increase consumer prices, indicating corporate taxes fall partly on consumers. The effect of business taxes on gas prices increases if consumer demand is less elastic, local markets are less competitive, and when local gas stations coordinate. These results suggest that firms reduce their corporate tax burden by shifting taxes to stakeholders not just profits to low-tax countries.

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Participating Institutions

TRR 266‘s main locations are Paderborn University (Coordinating University), HU Berlin, and University of Mannheim. All three locations have been centers for accounting and tax research for many years. They are joined by researchers from LMU Munich, Frankfurt School of Finance and Management, WHU – Otto Beisheim School of Management, European School of Management and Technology in Berlin and Goethe University Frankfurt who share the same research agenda.