Taxes And Firm Investment?
Document Type
Article
Source of Publication
Journal Of Macroeconomics
Publication Date
6-1-2023
Abstract
We investigate the firm-level investment response to unanticipated narrative shocks to average personal and corporate tax rates using a universal micro dataset of publicly-traded U.S. firms for the post-1976 period. Using local projections, we show that: (i) corporate tax shocks have significant effects on investment while personal tax shocks do not; (ii) corporate income tax responses are negative overall, and this result is driven by smaller firms who face larger borrowing constraints, especially when the accompanying monetary policy is contractionary or output gap is slack; (iii) there is some evidence of positive personal income tax responses during monetary contractions by dividend-paying firms, which is consistent with the recent literature.
DOI Link
ISSN
Publisher
Elsevier BV
Volume
76
Disciplines
Business
Keywords
Tax policy, Firm-level data, Local projections, Corporate tax, Personal tax
Recommended Citation
Arin, K. Peren; Devereux, Kevin; and Mazur, Mieszko, "Taxes And Firm Investment?" (2023). All Works. 6309.
https://zuscholars.zu.ac.ae/works/6309
Indexed in Scopus
no
Open Access
yes
Open Access Type
Green: A manuscript of this publication is openly available in a repository