Corporate Tax Avoidance and Sales: Microevidence and Aggregate Implications
This paper examines the effect of corporate tax avoidance (CTA) on U.S. firm-level sales and its aggregate implications. In theory, CTA gives a competitive edge to avoiding firms, which affects the distribution of sales in the economy. In practice, we find a causal impact of CTA on firm-level sales using a broad set of measures of tax avoidance and different identification strategies. Combining microestimates and the model, we assess how changes in CTA over the past two decades have shaped the distribution of sales across U.S. industries. Although the effects vary by sector, rising CTA among large firms has reinforced their dominant positions, contributing to increased concentration, in several key industries. This paper was accepted by Maria Guadalupe, business strategy. Funding: Financial support from the ENS Paris-Saclay Booster’s program, from the SSHRC [Insight Development Grant 207-2018-2019-Q1-00406], from the UQAM research chair on the local impact of multinationals, and from the Fonds de la Recherche Scientifique – FNRS [Grant No. F.4533.23] is gratefully acknowledged. Supplemental Material: The data files are available at https://doi.org/10.1287/mnsc.2024.05773 .
Authors
- Mathieu Parenti (ORCID: https://orcid.org/0000-0002-0080-1938)
- Farid Toubal (ORCID: https://orcid.org/0000-0002-9393-2303)
- Julien Martin (ORCID: https://orcid.org/0000-0002-7375-129X)
Institutions
- Université du Québec à Montréal (CA)
- Centre d'Etudes Prospectives et d'Informations Internationales (FR)
- Institut National de Recherche pour l'Agriculture, l'Alimentation et l'Environnement (FR)
- Centre d'Économie de la Sorbonne (FR)
- Laboratoire d’Economie de Dauphine (FR)
- Centre de Recherche en Économie et Statistique (FR)
- Université Paris Dauphine-PSL (FR)
Publication Details
- Journal
- Management Science
- Published
- 2025-12-08
- DOI
- https://doi.org/10.1287/mnsc.2024.05773
- Citations
- 18
- Primary Topic
- Corporate Taxation and Avoidance
- Type
- article
- Field-Weighted Citation Impact
- 19.55
Funders
- Université du Québec à Montréal