American Economic Journal:
Macroeconomics
ISSN 1945-7707 (Print) | ISSN 1945-7715 (Online)
The Effect of Corporate Taxes on Investment and Entrepreneurship
American Economic Journal: Macroeconomics
vol. 2,
no. 3, July 2010
(pp. 31–64)
Abstract
We present new data on effective corporate income tax rates in 85 countries in 2004. The data come from a survey, conducted jointly with PricewaterhouseCoopers, of all taxes imposed on "the same" standardized mid-size domestic firm. In a cross-section of countries, our estimates of the effective corporate tax rate have a large adverse impact on aggregate investment, FDI, and entrepreneurial activity. Corporate tax rates are correlated with investment in manufacturing but not services, as well as with the size of the informal economy. The results are robust to the inclusion of many controls. (JEL E22, F23, G31, H25, H32, L26)Citation
Djankov, Simeon, Tim Ganser, Caralee McLiesh, Rita Ramalho, and Andrei Shleifer. 2010. "The Effect of Corporate Taxes on Investment and Entrepreneurship." American Economic Journal: Macroeconomics 2 (3): 31–64. DOI: 10.1257/mac.2.3.31Additional Materials
JEL Classification
- E22 Capital; Investment; Capacity
- F23 Multinational Firms; International Business
- G31 Capital Budgeting; Fixed Investment and Inventory Studies
- H25 Business Taxes and Subsidies including sales and value-added (VAT)
- H32 Fiscal Policies and Behavior of Economic Agents: Firm
- L26 Entrepreneurship