Does the Tax System Favor Superstar Firms?
79 Pages Posted: 26 Jan 2023 Last revised: 17 Apr 2023
University of North Carolina Kenan-Flagler Business School
University of North Carolina at Chapel Hill
Date Written: April 2023
Influential research finds that economic activity is increasingly concentrated in large, highly profitable "superstar firms," potentially leading to adverse outcomes such as decreased competition and entrenchment. Acting on concerns that the tax system favors superstar firms, policymakers are increasingly targeting superstar firms with tax increases. We test the validity of the underlying assumption that superstar firms are tax advantaged, using both forward-looking and backward-looking tax burden measures. Overall, we find little evidence that superstar firms systematically pay lower taxes than their non-superstar competitors or smaller profitable firms, casting doubt on the idea that the tax system favors superstar firms.
Keywords: superstar firms, corporate taxes
JEL Classification: H25, H26, M21, L22, L41
Suggested Citation: Suggested Citation
University of North Carolina at Chapel Hill ( email )
Chapel Hill, NC 27599-3490