How do tax incentives affect investment and productivity? firm - level evidence from China by Yongzheng Liu and Jie Mao
By: Liu, Yongzheng
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Contributor(s): Mao, Jie.
Material type: 
ArticlePublisher: 2019Subject(s): SOCIEDADES | INVERSIONES EMPRESARIALES | IMPUESTOS | INCENTIVOS FISCALES | CHINA
In:
American Economic Journal. Economic Policy v. 11, n. 3, August 2019, p. 261-291Summary: China initiated a major reform for capital taxation in 2004. Completed in 2009, it introduced permanent tax incentives for firms' investment in fixed assets. We explore a unique firm-level dataset from years 2005–2012 and utilize a quasi-experimental design to test the impacts of the reform on firms' investment and productivity. We find that, on average, the reform raised investment and productivity of the treated firms relative to the control firms by 38.4 percent and 8.9 percent, respectively. We also show that the positive effects tend to be strengthened for firms with financial constraints.
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| OP 2135/2019/3 American Economic Journal : Economic Policy | OP 2135/2019/3-1 Life - cycle consumption patterns at older ages in the United States and the United Kingdom | OP 2135/2019/3-2 Casting a wider tax net | OP 2135/2019/3-3 How do tax incentives affect investment and productivity? | OP 2135/2019/3-4 The impact of investment incentives | OP 2135/2019/4 American Economic Journal : Economic Policy | OP 2135/2019/4-1 Carbon taxes and CO2 emissions |
Resumen.
Bibliografía.
China initiated a major reform for capital taxation in 2004. Completed in 2009, it introduced permanent tax incentives for firms' investment in fixed assets. We explore a unique firm-level dataset from years 2005–2012 and utilize a quasi-experimental design to test the impacts of the reform on firms' investment and productivity. We find that, on average, the reform raised investment and productivity of the treated firms relative to the control firms by 38.4 percent and 8.9 percent, respectively. We also show that the positive effects tend to be strengthened for firms with financial constraints.
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