Tax Burden Reduction and Job Creation : A Sector-Specific Analysis in Brazil's [B]3 Companies

Fiscal theory posits that taxes and levies directly affecting labor costs can impact employment rates. Prior studies examined the effects of corporate taxation on employment and discovered significant short- and long-term relationships between tax revenue and employment rates. Our research explores job creation's connection to reduced tax burdens via tax planning in the three most represented sectors of companies listed in [B]3, using accounting data instead of macroeconomic data. Employing quantile regression, we analyzed data from 2011-2019. Our results indicate that tax burden reduction does not necessarily lead to employment expansion. The relationship between effective tax rates and employment rates is ambiguous, with both positive and negative associations found in specific sectors. Industrial goods companies reduced tax burdens without increasing jobs, while cyclical consumption firms experienced labor force growth after tax burden reduction. Public utility companies in the median distribution both lowered tax burdens and saw job increases. Studying the link between tax policies and labor market conditions provides crucial insights into their interdependence and overall economic consequences