Liu, Li (2011) Do Taxes Distort Corporations' Investment Choices? Evidence from Industry‐Level Data. In: International Institute of Public Finance (IIPF) Annual Conference, 07/08/2011-11/08/2011, University of Michigan, USA. (Unpublished)Full text not available from this repository.
The U.S. corporate income tax system provides investment incentives that vary across asset types. Do corporations’ investment choices respond to these differences and if so, by how much? I analyze the effect of corporate income taxes on the allocation of new capital investment in the U.S. economy by constructing an industry-level panel data from 1962 to 1997. My preferred-IV estimates of the asset substitution elasticities suggest a sizable interasset distortion effect of corporate income taxes. Substitutability is the strongest between machinery equipment and computing and electronic equipment. Compared to a revenue-neutral uniform tax scheme, differential corporate income taxes cause under-investment in computing and electronic equipment and over-investment in machinery and transportation equipment.
|Item Type:||Conference or Workshop Item (Paper)|
|Centre:||Oxford University Centre for Business Taxation|
|Date Deposited:||20 Aug 2012 10:22|
|Last Modified:||23 Oct 2015 14:07|
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