Most American renters would prefer to be homeowners and report that liquidity constraints prevent them from buying homes. We study a California state government program offering large down payment assistance loans to certain prospective first-time buyers. The loans charge a share of future home price appreciation and do not add to monthly costs. Leveraging conditional random assignment, we find that a loan offer more than doubles homeownership, and the effect persists a year after the deadline to use the loan. We estimate a model of non-financial preferences for homeownership, down payment capacity, and program participation costs that explains our reduced-form results. Participants value the loans primarily because they relax liquidity constraints that bind when meeting mortgage obligations, not because they subsidize housing consumption or help bypass minimum down payment requirements. Average willingness to pay for the California down payment assistance greatly exceeds expected fiscal cost, with a higher marginal value of public funds (MVPF) than housing voucher programs. Our MVPF estimate reflects high valuations among participants who would otherwise have bought with the smallest allowed down payment, and recovery of outlays through principal repayment and appreciation revenue.

This paper characterizes the equity–efficiency tradeoff of corporate taxation using a stylized model that draws on the corporate investment and tax incidence literatures. We derive benchmark optimal corporate tax formulas in terms of estimable reduced-form elasticities and welfare weights on workers and firm owners. The elasticity of taxable profits is a sufficient statistic for the efficiency costs of the corporate tax. Higher corporate tax rates are desirable when firm owners have low welfare weights, and less desirable when taxing profits reduces wages. These empirical objects remain central across model extensions, including worker- and firm-level heterogeneity, endogenous firm entry, shared firm ownership, tax sheltering, international capital mobility, productivity externalities, monopsony, and linear labor income taxes. We survey the empirical literature and find that existing estimates can support a wide range of optimal tax rates. A quantitative analysis identifies combinations of welfare weights that rationalize the current US 21% corporate tax rate as optimal and provides alternative numerical benchmarks for optimal corporate tax rates.

Governments undertake large expenditures to keep firms alive and workers employed during crises. However, directing that support to viable but financially constrained firms is often difficult. This paper asks whether tax loss carrybacks, which give firms with a history of profits a refund for prior taxes paid, can reach productive firms and preserve jobs at low net cost to the government. We study Australia's 2020 carryback using the universe of business tax returns linked to monthly payroll records. Eligible firms were more likely than other loss-making firms to return to profitability; among them, more financially constrained firms were more likely to claim. Comparing corporations to similar pass-through businesses, which were ineligible, we find that the average potential refund reduced closures within two years by 0.25 percentage points, about 4 percent of the closures that would otherwise have occurred. Each dollar of potential refund raised payroll by 77 cents over sixteen months, mainly by retaining existing workers. Following workers across employers, we estimate that 35 percent of this is earnings workers would otherwise have lost. We find that 52 percent of the losses eligible for refunds would otherwise have been deducted against profits within seven years. Combining our estimates of survival, workers' earnings, and forgone deductions, we estimate a marginal value of public funds of 2.26. Workers' preserved earnings account for most of the benefit, and the government's net cost is 40 cents per refund dollar.

This paper measures the effects of state corporate and personal income tax reforms on business entry using an event study research design. We focus on reforms that do not coincide with federal tax changes, are preceded and followed by stable tax policy, and substantially change tax burdens. Corporate tax reforms cause meaningful changes in business entry: we measure a 5-year elasticity of 2.7 with respect to the net-of-tax rate. This is driven by large effects of tax cuts. Corporate tax cuts also reduce the predicted growth potential of entrants. We do not find strong evidence of cross-border spillovers, and find no evidence that personal income tax reforms affect business entry.

We analyze the incidence of a linear corporate tax using a simple and portable competitive general equilibrium model in which capital owners choose to invest either in domestic production or a foreign investment opportunity and workers make extensive margin labor supply decisions. Our analysis explores the effect of corporate taxation on wages, employment, domestic profits, and domestic investment. Analytical results and numerical simulations generate insights in line with recent empirical evidence on corporate tax incidence: the burden of the corporate tax is shared between workers and firms, with larger responses among more capital-intensive firms.