Do Corporate Taxes Reduce Productivity and Investment at the Firm Level? [electronic resource]: Cross-Country Evidence from the Amadeus Dataset / Cyrille Schwellnus and Jens Arnold = Les impôts sur le revenu des sociétés réduisent-ils la productivité et l'investissement des firmes? / Cyrille Schwellnus et Jens Arnold

By:

Schwellnus, Cyrille

Contributor(s):

Arnold, Jens

Material type: Article

ArticleSeries: OECD Economics Department Working Papers ; no.641.Publication details: Paris : OECD Publishing, 2008.Description: 26 p. ; 21 x 29.7cmOther title:

Les impôts sur le revenu des sociétés réduisent-ils la productivité et l'investissement des firmes?

Subject(s):

Economics

Other classification:

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Abstract: This paper uses a stratified sample of firms across OECD economies over the period 1996-2004 to analyse the effects of corporate taxes on productivity and investment. Applying a differences-in-differences estimation strategy which exploits differential effects of corporate taxes on firms with different profitability, it is found that corporate taxes have a negative effect on productivity at the firm level. The effect is negative across firms of different size and age classes except for the small and young, which may be attributable to the relatively low profitability of small and young firms. The negative effect of corporate taxes is particularly pronounced for firms that are catching up with the technological frontier. In the investment analysis, the results suggest that corporate taxes reduce investment through an increase in the user cost of capital. This may partly explain the negative productivity effects of corporate taxes if new capital goods embody technological change.

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Item type	Home library	Collection	Call number	Status	Date due	Barcode	Item holds
Working Paper	Biblioteca Digital	Colección OECD	OECD 236246774048 (Browse shelf(Opens below))	Not For Loan

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This paper uses a stratified sample of firms across OECD economies over the period 1996-2004 to analyse the effects of corporate taxes on productivity and investment. Applying a differences-in-differences estimation strategy which exploits differential effects of corporate taxes on firms with different profitability, it is found that corporate taxes have a negative effect on productivity at the firm level. The effect is negative across firms of different size and age classes except for the small and young, which may be attributable to the relatively low profitability of small and young firms. The negative effect of corporate taxes is particularly pronounced for firms that are catching up with the technological frontier. In the investment analysis, the results suggest that corporate taxes reduce investment through an increase in the user cost of capital. This may partly explain the negative productivity effects of corporate taxes if new capital goods embody technological change.

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