Arbeitspapier
Profit Taxation, R&D Spending, and Innovation
We study how profit taxation affects plants' R&D spending and innovation activities. Relying on geocoded survey panel data which approximately covers the universe of R&D-active plants in Germany, we exploit around 7,300 changes in the municipal business tax rate over the period 1987–2013 for identification. Applying event study models, we find a negative and statistically significant effect of an increase in profit taxation on plants' R&D spending with an implied long-run elasticity of −1.25. Reductions in R&D are particularly strong among more credit-constrained plants. In contrast, homogeneity of effects across the plant size distribution questions policy makers common practice to link targeted R&D tax incentives to plant size. We further find lagged negative effects on the (citation-weighted) number of filed patents.
- Language
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Englisch
- Bibliographic citation
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Series: IZA Discussion Papers ; No. 14830
- Classification
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Wirtschaft
Business Taxes and Subsidies including sales and value-added (VAT)
Fiscal Policies and Behavior of Economic Agents: Firm
Innovation and Invention: Processes and Incentives
Management of Technological Innovation and R&D
- Subject
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corporate taxation
firms
R&D
innovation
patents
- Event
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Geistige Schöpfung
- (who)
-
Lichter, Andreas
Löffler, Max
Isphording, Ingo E.
Nguyen, Thu-Van
Pöge, Felix
Siegloch, Sebastian
- Event
-
Veröffentlichung
- (who)
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Institute of Labor Economics (IZA)
- (where)
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Bonn
- (when)
-
2021
- Handle
- Last update
-
10.03.2025, 11:43 AM CET
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Lichter, Andreas
- Löffler, Max
- Isphording, Ingo E.
- Nguyen, Thu-Van
- Pöge, Felix
- Siegloch, Sebastian
- Institute of Labor Economics (IZA)
Time of origin
- 2021
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Property Taxation, Local Labor Markets and Rental Housing
Welfare Effects of Property Taxation
Welfare effects of property taxation
Welfare Effects of Property Taxation
Employment Effects of Local Business Taxes
Wage Incidence of Local Corporate Taxation - Micro Evidence from Germany
Profit taxation, R&D spending, and innovation
Accounting for labor demand effects in structural labor supply models
On event studies and distributed-lags in two-way fixed effects models: Identification, equivalence, and generalization