Saturday, December 21, 2013

Brandstetter & Jacob: Do Corporate Tax Cuts Increase Investments?

Laura Brandstetter & Martin Jacob have posted “Do Corporate Tax Cuts Increase Investments?” on SSRN.  Here is the abstract:

This paper studies the effect of corporate taxes on investment. Using firm-level data on German corporations, we investigate the 2008 tax reform that cut corporate taxes by 10 percentage points. We expect heterogeneous investment responses across firms, since firms with a foreign parent have more cross-country profit shifting opportunities than domestically owned firms. Using a matching difference-in-differences approach, we show that, following the corporate tax cut, domestically owned firms increased investments to a larger extent than foreign-owned firms. Our results imply that corporate tax changes can increase corporate investment but have heterogeneous investment responses across firms.

http://lawprofessors.typepad.com/business_law/2013/12/brandstetter-jacob-do-corporate-tax-cuts-increase-investments.html

Corporations, Stefan J. Padfield | Permalink

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