Lagged Reactions in Short-Run Estimates of Tax Shifting of Company Income and Sales Taxes in Kenya

Posted: 29 Oct 2018

Date Written: 1986

Abstract

The aim is to provide some insights into the short-run dynamics of tax shifting. Using Kenyan cross-section data on firms for 1974 and 1975, estimates are made of current and lagged shifting for both the company income and sales taxes. One of the findings is that the income tax is over-fully shifted. Because this outcome regularly occurs in the empirical literature of tax shifting, the main theoretical effort of the paper is devoted to explaining this result. A Williamson-type model is developed which attributes any excess of 100% shifting to reductions in managerial slack that accompany increases in the income tax.

Suggested Citation

Brent, Robert J, Lagged Reactions in Short-Run Estimates of Tax Shifting of Company Income and Sales Taxes in Kenya (1986). Journal of Development Economics, Volume 20, Issue 1, January–February 1986, Pages 15-32 , Available at SSRN: https://ssrn.com/abstract=3275015

Robert J Brent (Contact Author)

Fordham University ( email )

Department of Economics
441 E Fordham Road
Bronx, NY 10458
United States
718 817 4058 (Phone)

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