Arbeitspapier
Corporate tax Reform and foreign direct investment in Germany: evidence from firm-level data
Does the reduction of the effective tax burden on corporations trigger foreign direct investment? We take the German tax reform of 2000 as a natural experiment in order to isolate the impact of corporate taxation on the investment of foreign-held affiliates in Germany. We do so by exploiting the very rich MiDi data base from the Deutsche Bundesbank. Although we deliberately choose an approach which is likely to underestimate the tax effects on investment we find significant evidence that the tax reduction had the intended effect of - ceteris paribus - fostering inward direct investment. We find an elasticity of inward foreign direct investment with respect to the effective marginal tax rate of -0.7. We repeat the analysis for different subgroups and find high degrees of heterogeneity. Our results do not allow to decide whether the model of discrete investment choices or the model of marginal adjustment of the capital stock performs better in explaining the investment data.
- Language
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Englisch
- Bibliographic citation
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Series: CESifo Working Paper ; No. 1722
- Classification
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Wirtschaft
Business Taxes and Subsidies including sales and value-added (VAT)
Taxation and Subsidies: Efficiency; Optimal Taxation
- Event
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Geistige Schöpfung
- (who)
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Becker, Johannes
Fuest, Clemens
Hemmelgarn, Thomas
- Event
-
Veröffentlichung
- (who)
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Center for Economic Studies and ifo Institute (CESifo)
- (where)
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Munich
- (when)
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2006
- Handle
- Last update
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10.03.2025, 11:44 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
- Becker, Johannes
- Fuest, Clemens
- Hemmelgarn, Thomas
- Center for Economic Studies and ifo Institute (CESifo)
Time of origin
- 2006
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Wie viel Aufkommen kostet die Einführung eines Konsumsteuersystems? Weniger als 1% des BIP
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The taxation of foreign profits: The old view, the new view and a pragmatic view
Tax competition and firm mobility: An assessment of empirical findings
Tax Enforcement and Tax Havens under Formula Apportionment
Corporate tax policy and international mergers and acquisitions: is the tax exemption system superior
Optimal tax policy when firms are internationally mobile
Tax competition: greenfield investment versus mergers and acquisitions
A backward looking measure of the effective marginal tax burden on investment
Sind die Unternehmenssteuern in Deutschland zu hoch?
Steuerpolitische Perspektiven der Unternehmensteuerreform 2008
Die effektive steuerliche Grenzbelastung von Investitionen: Das GKS-Maß
Wie viel Aufkommen kostet die Einführung eines Konsumsteuersystems? Weniger als 1% des BIP
Die deutsche Steuerquote: Konzeptionelle Fragen und internationaler Vergleich