It is well known that in quarterly data corporate
profits are highly elastic to output: this accounts for the high output elasticities of net
taxes in Canada and USA (in both, the estimated contemporaneous output elasticity of
profits is above 4), the only two countries where corporate income taxes have a positive
contemporaneous elasticity to corporate profits. Note also that the output elasticities of
net taxes tend to rise slightly in S2 in all countries except Germany.