Tax incidence in open economies.

Understanding the incidence of taxes is crucial for designing tax policy. The burden of taxes does not always fall on those who remit the tax, and assessing the incidence becomes increasingly complex as the economy becomes increasingly global. The first two papers focus on the incidence of corporate taxes. The final paper looks at the effects of U.S. expatriate tax policies and foreign individual income tax rates. In Passing the Burden: Corporate Tax Incidence in Open Economies, I estimate that a ten percentage point increase in the corporate tax rate of high-income countries reduces mean annual gross wages by seven percent using cross-country data from the Luxembourg Income Study. The results do not support the common belief that the burden of corporate taxes falls most heavily on skilled labor; corporate taxation appears to reduce the wages of low-skill workers to the same degree that it reduces the wages of high-skill workers. The second paper, The Incidence of Capital Taxation and the Magnitude of Its Burden, theoretically examines the impact of source-based capital taxation in an open economy. This paper identifies five key considerations that impact the effect of decreasing the tax on capital: the elasticity of substitution between capital and labor, capital's and labor's shares of total output, the presence and magnitude of capital externalities, the elasticity of capital supply and the extent of the initial tax distortion. I find that for realistic values of key parameters in the United States, a one percentage point decrease in the capital tax rate increases the after-tax income of labor by 0.26 percent and the after-tax income of capital by 1.59 percent. In U.S. Expatriates: Individual Income Tax Rates and the Location Decisions of U.S. Citizens, I estimate that a ten percentage point decrease in the foreign individual income tax rate increases the supply of U.S. labor to that country by seven percent. Results are consistent with a model in which U.S. citizens filing foreign earned income exclusions move abroad to pursue individual aspirations, while those claiming foreign tax credits move at the request of U.S. multinational firms.Ph.D.EconomicsFinanceLabor economicsSocial SciencesUniversity of Michigan, Horace H. Rackham School of Graduate Studieshttp://deepblue.lib.umich.edu/bitstream/2027.42/126685/2/3276154.pd