Maximilian A. Müller

Consumption Taxes and Corporate Investment

While consumers nominally pay the consumption tax, theoretical and empirical evidence is mixed on whether corporations partly shoulder this burden, thereby, affecting corporate investment. Using a quasi-natural experiment, we show that consumption taxes decrease investment. Firms facing more elastic demand decrease investment more strongly because they bear more of the consumption tax. We corroborate the validity of our findings using 86 consumption tax changes in a cross-country panel. We document two mechanisms underlying the investment response: reduced firms’ profitability and lower aggregate consumption. Importantly, the magnitude of the investment response to consumption taxes is similar to that of corporate taxes.

When You Talk, I Remain Silent: Spillover Effects of Peers’ Mandatory Disclosures on Firms’ Voluntary Disclosures

We investigate how firms’ disclosure decisions interact. We predict and find that mandating some firms’ disclosures reduces other firms’ voluntary disclosures due to informational spillovers. Consistent with such spillovers, firms reduce their voluntary disclosures more the greater the number of peers from which firms and their stakeholders can learn and hide. These results hold for a number of alternative disclosure measures and our identifying assumptions receive empirical support across several in- and out-of-sample validation tests.

Tax Avoidance and Tax Incidence

Economists broadly agree that the economic burden of corporate taxes is not entirely borne by shareholders, but also borne in part by employees or consumers. We model corporate tax avoidance in a setting where shareholders do not bear the entire economic burden of the corporate tax. We show the relation between corporate tax incidence and corporate tax avoidance depends on the elasticity of labor supply, the productivity of capital relative to labor, and the tax deductibility of labor and capital. These forces have competing effects, making the association between tax avoidance and incidence an empirical question. Empirically, we find that firms whose shareholders bear less of the economic burden of corporate taxes engage in less avoidance, and that the results are strongest under conditions predicted by our model. Our findings suggest that maximizing after-tax profits might entail less tax avoidance if shareholders do not entirely bear the corporate tax burden.