Corporate taxes and entrepreneurs income: A credit channel
Delis M.D. Galariotis E. Iosifidi M. Ongena S.
July 2025Elsevier B.V.
Journal of Corporate Finance
2025#93
Corporate taxation can have redistributive effects on income and wealth. We hypothesize and empirically establish such an effect working via bank credit. We use a unique sample of small majority-owned firms that apply for credit, where only some firms (treated) experience a corporate tax cut. We show that after the decrease in corporate tax rates, the treated poorer business owners get easier access to credit. However, this policy also considerably increases loan amounts and decreases loan spreads for the treated richer. Ultimately, reducing the corporate tax rate predominantly increases the future income and wealth of richer business owners.
Bank credit , Corporate taxes , Credit score , Economic inequality
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Audencia Business School, 8 Rte. de la Jonelière, Nantes, 44300, France
Bang College of Business, KIMEP University, 4 Abay Avenue, Almaty, 050010, Kazakhstan
Montpellier Business School, 2300 Avenue des Moulins, Montpellier, 34080, France
Department of Finance, University of Zurich, Swiss Finance Institute, KU Leuven, NTNU Business School and CEPR, Plattenstrasse 14, Zurich, CH-8032, Switzerland
Audencia Business School
Bang College of Business
Montpellier Business School
Department of Finance
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