The effect of corporate taxation on investment and financial policy evidence from the DPAD by Eric Ohrn
By: Ohrn, Eric
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Material type: 
ArticlePublisher: 2018Subject(s): IMPUESTOS | INCIDENCIA Y TRASLACION | INVERSIONES | ESTADOS UNIDOS | MODELOS ECONOMETRICOS | SOCIEDADESOnline resources: Click here to access online
In:
American Economic Journal. Economic Policy v. 10, n. 2, May 2018, p. 272-301Summary: This study estimates the investment, financing, and payout responses to variation in a firm’s effective corporate income tax rate in the United States. I exploit quasi-experimental variation created by the Domestic Production Activities Deduction, a corporate tax expenditure created in 2005. A 1 percentage point reduction in tax rates increases investment by 4.7 percent of installed capital, increases payouts by 0.3 percent of sales, and decreases debt by 5.3 percent of total assets. These estimates suggest that lower corporate tax rates and faster accelerated
depreciation each stimulate a similar increase in investment, per dollar in lost revenue.
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| OP 2135/2018/2 American Economic Journal : Economic Policy | OP 2135/2018/2-1 Fiscal centralization | OP 2135/2018/2-2 Cash-on-hand and college enrollment | OP 2135/2018/2-3 The effect of corporate taxation on investment and financial policy | OP 2135/2018/3 American Economic Journal : Economic Policy | OP 2135/2018/3-1 Cash-flow taxes in an international setting | OP 2135/2018/3-2 Consumer valuation of fuel costs and tax policy: |
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Resumen.
Bibliografía.
This study estimates the investment, financing, and payout responses to variation in a firm’s effective corporate income tax rate in the United States. I exploit quasi-experimental variation created by the Domestic Production Activities Deduction, a corporate tax expenditure created in 2005. A 1 percentage point reduction in tax rates increases investment by 4.7 percent of installed capital, increases payouts by 0.3 percent of sales, and decreases debt by 5.3 percent of total assets. These estimates suggest that lower corporate tax rates and faster accelerated
depreciation each stimulate a similar increase in investment, per dollar in lost revenue.
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