Discussion paper
DP15060 Corporate tax avoidance and sales: micro evidence and aggregate implications
This paper investigates the influence of corporate tax avoidance (CTA) on firm-level sales, and its aggregate implications. CTA gives a competitive advantage to avoiding firms, which affects the distribution of sales in the economy. Using three identification strategies, we find a causal impact of CTA on sales in US firm-level data. In the US, CTA increased more among the largest firms, which has reinforced their dominant position. In key industries, trends in CTA firms explain 10%-30% of the increase in concentration from 1994 to 2017. Further analysis shows the impact of CTA-induced distortions on industrial output is relevant at a macroeconomic scale.
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