Code for Corporate Minimum Tax and the Elasticity of Taxable Income: Evidence from Administrative Tax Records

We examine business responses to a minimum tax that prescribed fixed floors on corporate tax liability while also permitting minimum tax credit carry-forwards. Using 2010-2020 tax-return administrative data on all Slovak corporations, we find that a mass of companies immediately relocated from reporting zero taxable income towards bunching at the new tax floors. We infer the ETI to be between 0.33 and 2.28 across VAT and turnover categories and quantify the marginal efficiency burden of the corporation tax. Given limited extensive-margin business responses, our evidence suggests that the minimum tax reduced the overall efficiency burden while raising additional tax revenue.