The recent surge in corporate inversions—companies buying or merging with foreign firms to change their tax rate—has rekindled attention to reforming the corporate income tax. The Senate Finance Committee is having a hearing today on the topic.

One of the proposed solutions to the inversion problem is lowering the corporate tax rate. At today’s testimony, Leslie Robinson, professor at the Tuck School of Business at Dartmouth College, stated that lowering the statutory tax rate would help reduce the incentive for corporations to move income abroad. University of California-Berkeley economist Laura Tyson has similarly argued that reducing the rate would help solve the inversion problem. But before we can understand how changes in the tax rate affects firm movement, we need to how much of the tax firms actually pay.

When economists talk about taxation in general, they often ask about the incidence of the tax. In short, incidence means who actually bears the cost of the tax. A policymaker may want to tax a certain good, service or income stream but that doesn’t mean the target will necessarily bear the full burden.

The corporate tax rate has been used as an example of this phenomenon before. For instance, some economists, such as Harvard University economist Greg Mankiw, argue that if you try to tax corporate income, you won’t end up hitting your intended target—the owners of capital. The tax will cause the corporation to move and avoid the cost of the tax. Instead, the burden will fall mostly on workers as capital leaves the high-tax area.

But a new working paper by economists Juan Carlos Suarez Serrato of Duke University and Owen Zidar of the University of Chicago finds a different result. The authors look at differences in state corporate income taxes and firm mobility to better understand the incidence of the corporate income tax. Serrato and Zidar find that firms are mobile, but not as mobile as previously thought. Firms are only about twice as mobile as workers. Firms not only consider tax changes when it comes to mobility, but other factors systemic to the area, such as worker productivity.

After considering these factors, the authors calculate the incidence of the tax. Workers do bear some of the tax, about 35 percent, but certainly not the majority of it. Capital, or owners of the firm, end up bearing about 40 percent of the tax while the remaining 25 percent is borne by landowners. So firms in Silicon Valley (to borrow an example from the authors) probably won’t change their location due to a modest increase in the corporate income tax. The benefits of their location, near other technology firms in an area with highly productive workers, outweigh the cost.

The recent cases of corporate inversion has sparked this round of conversations, but the discussion about reforming the corporate income tax will most likely be around for a while. Comprehensively changing the tax will involve many moving pieces including the all-important rate itself. If we want to understand how changes in the rate will affect the movement of companies across borders, we need to understand who actually bears the cost of the tax. This new working paper from Serrato and Zidar helps us understand this very important question.