Capital gains taxes and real corporate investment evidence from Korea by Terry S. Moon
By: Moon, Terry S
.
Material type: 
ArticleSubject(s): CAPITAL | IMPUESTO SOBRE LAS RENTAS DEL CAPITAL | EMPRESAS | INVERSIONES | COREA DEL SUR
In:
The American Economic Review v. 112, n. 8, August 2022, p. 2669-2700Summary: This paper assesses the effects of capital gains taxes on investment in the Republic of Korea (hereafter, Korea), where capital gains tax rates vary at the firm level by firm size. Following a reform in 2014, firms with a tax cut increased investment by 34 log points and issued more equity by 9 cents per dollar of lagged revenue, relative to unaffected firms. Additionally, the effects were larger for firms that appeared more cash constrained or went public after the reform. Taken together, these findings are consistent with the "traditional view" predicting that lower payout taxes spur equity-financed investment by increasing marginal returns on investment.
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| OP 234/2022/6-1 Offshore profit shifting and aggregate measurement | OP 234/2022/7 The American Economic Review | OP 234/2022/8 The American Economic Review | OP 234/2022/8-1 Capital gains taxes and real corporate investment | OP 234/2022/9 The American Economic Review | OP 234/2022/9-1 Dividend taxes and the allocation of capital | OP 234/2023/1 The American Economic Review |
Resumen
Bibliografía
This paper assesses the effects of capital gains taxes on investment in the Republic of Korea (hereafter, Korea), where capital gains tax rates vary at the firm level by firm size. Following a reform in 2014, firms with a tax cut increased investment by 34 log points and issued more equity by 9 cents per dollar of lagged revenue, relative to unaffected firms. Additionally, the effects were larger for firms that appeared more cash constrained or went public after the reform. Taken together, these findings are consistent with the "traditional view" predicting that lower payout taxes spur equity-financed investment by increasing marginal returns on investment.
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