Corporate tax avoidance and sales: micro evidence and aggregate implications
Abstract: 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 leads to an increase in concentration if large firms adopt more aggressive CTA strategies. Using three identification strategies, we find a causal impact of CTA on sales in US firm-level data. CTA increased more among the largest firms, which reinforced their dominant position. In key industries, differences in CTA between firms
explain 10%-30% of the increase in concentration since 1994. The influence of CTAinduced concentration on industrial output is relevant at a macroeconomic scale.