The Effects of Corporate Taxes on Small Firms
Harju, Jarkko; Koivisto, Aliisa; Matikka, Tuomas (2020-03-06)
Harju, Jarkko
Koivisto, Aliisa
Matikka, Tuomas
Valtion taloudellinen tutkimuskeskus
06.03.2020
Julkaisun pysyvä osoite on
https://urn.fi/URN:ISBN:978-952-274-251-3
https://urn.fi/URN:ISBN:978-952-274-251-3
Kuvaus
nonPeerReviewed
Tiivistelmä
We study the impact of corporate taxes on firm-level investments, total output and input usage by exploiting a 4.5 percentage-point corporate tax rate cut in Finland in 2014. We use detailed administrative data and a differences-in-differences method comparing small corporations (tax rate cut) to similar partnerships (no change in tax incentives). We find no significant investment responses. However, we observe an increase in annual sales and variable costs, suggesting that corporate tax rates have an effect on business activity. The effects are driven by entrepreneurs who actively work in their firm, suggesting that the tax cut increased entrepreneurial effort.
Tutkimusteema
Social security, taxation and inequality, Business regulation and international economics
JEL
G31, G38, H21, H25
Avainsanat
corporate taxation, investments, business activity, small firms
Kokoelmat
- VATT Working Papers [164]