Program > Papers by author > Habu Katarzyna

The effect of loss offset provisions on the asymmetric behaviour of corporate tax revenues in the business cycle
Katarzyna Habu  1, 2@  
1 : Utah State University  (USU)  -  Website
Old Main Hill, Logan, Utah 84322 -  United States
2 : NBER

This paper estimates the response of corporate tax revenues to the business cycle fluctuations and calculates a heterogeneous asymmetry in the tax revenue responses between booms and recessions using a new index of loss offset generosity provisions. I find strong short-run contemporaneous impact of business cycle on corporate tax revenues and a persistent asymmetric response of corporate tax revenues to booms and recession. Loss offset generosity provisions enhance this asymmetry. Countries with more generous loss offset provisions experience much more volatile response of corporate tax revenues to business cycle during recessions, magnifying the asymmetry of cyclicality. As a result the automatic stabilizer impact of corporation tax will differ between booms and recessions, being stronger and more effective in the latter, especially in countries that offer more generous loss-offset provisions.


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