Arbeitspapier
Corporate taxation and the quality of research and development
This paper examines the impact of tax incentives on corporate research and development (R&D) activity. Traditionally, R&D tax incentives have been provided in the form of special tax allowances and tax credits. In recent years, several countries moreover reduced their income tax rates on R&D output. Previous papers have shown that all three tax instruments are effective in raising the quantity of R&D related activity. We provide evidence that, beyond this quantity effect, corporate taxation also distorts the quality of R&D projects, i.e. their innovativeness and revenue potential. Using rich data on corporate patent applications to the European patent office, we find that a low tax rate on patent income is instrumental in attracting innovative projects with a high earnings potential and innovation level. The effect is statistically significant and economically relevant and prevails in a number of sensitivity checks. R&D tax credits and tax allowances are in turn not found to exert a statistically significant impact on project quality.
- Sprache
-
Englisch
- Erschienen in
-
Series: CESifo Working Paper ; No. 4139
- Klassifikation
-
Wirtschaft
Fiscal Policies and Behavior of Economic Agents: General
State and Local Government; Intergovernmental Relations: General
Labor-Management Relations, Trade Unions, and Collective Bargaining: General
- Thema
-
corporate taxation
research and development
micro data
- Ereignis
-
Geistige Schöpfung
- (wer)
-
Ernst, Christof
Richter, Katharina
Riedel, Nadine
- Ereignis
-
Veröffentlichung
- (wer)
-
Center for Economic Studies and ifo Institute (CESifo)
- (wo)
-
Munich
- (wann)
-
2013
- Handle
- Letzte Aktualisierung
-
10.03.2025, 11:42 MEZ
Datenpartner
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Objekttyp
- Arbeitspapier
Beteiligte
- Ernst, Christof
- Richter, Katharina
- Riedel, Nadine
- Center for Economic Studies and ifo Institute (CESifo)
Entstanden
- 2013
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