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Do Corporate Taxes Hinder Innovation?

Authors Singh, Manpreet HKUST affiliated (currently or previously)
Mukherjee, Abhiroop View this author's profile
Zaldokas, Alminas View this author's profile
Issue Date 2014
Source Transatlantic Doctoral Conference 2014, London Business School, London , 2014
Summary We examine staggered changes in state-level corporate tax rates to show that an increase in taxes reduces future innovation. To sharpen our analysis, we exploit a novel dataset containing information on the geography of firms’ operations, and document that the effect is stronger among firms that have a higher proportion of operations in states that pass tax changes, and those that are located in states with laws that make shifting profits out of the state for tax reasons more difficult. Finally, we address concerns regarding endogeneity of tax changes by using instruments based on state legislative rules concerning tax increases.
Language English
Format Conference paper
Access Find@HKUST