Universität Bonn

Department of Economics

MEF-Seminar Summersemester 2022

Luigi Iovino, Bocconi University, 25.05.2022

We study the relationship between corporate taxation and carbon emissions in the U.S. We find that dirty firms pay lower profit taxes – the opposite of what optimal taxation of negative externalities prescribes. This relationship is driven by dirty firms benefiting disproportionately more from the tax shield of debt due to their higher leverage. In turn, we show that the higher leverage of dirty firms is explained by their higher asset tangibility. We embed our estimates into a general equilibrium framework and show that eliminating the tax-advantage of debt reduces carbon emissions by about 3.9%, while aggregate output falls by roughly 2.2%.
Wednesday, 25.05.22 - 12:15 PM - 01:30 PM
"Corporate Taxation and Carbon Emissions" (joint paper with Thorsten Martin and Julien Sauvagnat)
Juridicum, Adenauerallee 24-42
Faculty Room
not required
Institute for Macroeconomics and Econometrics
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