Economics, Econometrics and Finance
3 years ago

Payroll tax cuts boost profits for large firms, stimulate economy.

2 views
SSRN Electronic Journal
Labor Costs and Firm Behavior – Evidence from Payroll Tax Rate Variation
Youssef Benzarti, Jarkko Harju

Paper Summary

Payroll taxes impact wages, turnover, and profits at large firms but not at medium and small firms. Temporary payroll tax cuts in Finland led to increased profits and turnover for large firms even after the cuts were removed. This shows that high payroll taxes can hurt businesses, and temporary tax cuts can help boost the economy during tough times.

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