City Research Online

The Tax Advantage of Big Business: How the Structure of Corporate Taxation Fuels Concentration and Inequality

Hager, S. B. ORCID: 0000-0002-1205-3623 and Baines, J. (2020). The Tax Advantage of Big Business: How the Structure of Corporate Taxation Fuels Concentration and Inequality. Politics and Society, doi: 10.1177/0032329220911778

Abstract

Corporate concentration in the United States has been on the rise in recent years, sparking a heated debate about its causes, consequences, and potential remedies. In this study, we examine a facet of public policy that has been largely neglected in current debates about concentration: corporate taxation. As part of our analysis we develop the first empirical mapping of the effective tax rates (ETRs) of nonfinancial corporations disaggregated by size and broken down by jurisdiction. Our findings reveal a striking and persistent tax advantage for big business. Since the mid-1980s, large corporations have faced lower worldwide ETRs relative to their smaller counterparts. The regressive worldwide ETR is driven by persistent regressivity in the domestic ETR and a marked drop in the progressivity of the foreign ETR over the past decade. We go on to show how persistent regressivity in the worldwide tax structure is bound up with the increasing relative power of large corporations within the corporate universe, as well as a shift in firm-level power relations. As large corporations become less disposed to investments that may indirectly benefit ordinary workers, they become more disposed to shareholder value enhancement that directly benefits the asset-rich. What this means is that the corporate tax structure is connected not only to rising corporate concentration, but also to widening household inequality.

Publication Type: Article
Additional Information: Accepted for publication in Politics and Society. Re-use is restricted to non-commercial and no derivatives. Copyright © 2020, the authors.
Publisher Keywords: corporate taxation, concentration, inequality, capital as power, financialization
Subjects: H Social Sciences > HD Industries. Land use. Labor
H Social Sciences > HJ Public Finance
H Social Sciences > HN Social history and conditions. Social problems. Social reform
J Political Science > JF Political institutions (General)
Departments: School of Arts & Social Sciences > International Politics
Date Deposited: 30 Jan 2020 09:50
URI: https://openaccess.city.ac.uk/id/eprint/23595
[img]
Preview
Text - Accepted Version
Download (542kB) | Preview

Export

Downloads

Downloads per month over past year

View more statistics

Actions (login required)

Admin Login Admin Login