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We provide novel evidence on the incidence of business taxes using
comprehensive survey and experimental data from German firms.
Managers respond asymmetrically to randomized hypothetical tax
changes of opposite signs, consistent with asymmetric profit tax
incidence. They indicate that tax cuts would be primarily passed
on to workers and used for investment projects, while tax increases
would be shifted to consumers via higher prices and absorbed by
firm owners via lower profit distributions. We further show that
the stated incidence on workers rises with the absolute size of the
tax change, partially offsetting the burden borne by firm owners.
