Do pass-through owners pass tax burdens through to their workers?

Grant description:

Pass-through businesses—businesses whose owners pay tax on profits on their individual returns and which are not subject to the corporate income tax—have grown rapidly in importance over the past two decades. Yet even as little is known with confidence about who pays the corporate income tax, even less is known about who pays taxes on the income of pass-through businesses. Risch will explore the incidence of taxes on the income of pass-through businesses by investigating whether and to what extent the compensation of employees of certain pass-through businesses changes in response to changes in the tax rates on the businesses’ owners. To do this, he will use a linked owner-firm-employee dataset created from administrative tax records.