Corporate marginal tax rate, tax loss carryforwards and investment functions: empirical analysis using a large German panel data set

Fred Ramb

No 2007,21, Discussion Paper Series 1: Economic Studies from Deutsche Bundesbank, Research Centre

Abstract: This study is the first empirical analysis to investigate the relationship between the investment behaviour of firms resident in Germany and the empirically determined marginal tax rates developed by John R. Graham. It is based on the Bundesbank's corporate balance sheet statistics for the period 1971-2002. In an autoregressive distributed lag model, the marginal tax rate is shown to be significant, with an elasticity of between 0.1 and 0.2. An error correction model does not produce any plausible results for the marginal tax rate. Graham's marginal tax rates are a complement to the methods typically used to determine the effective marginal tax rates and effective average tax rates.

Keywords: Corporate marginal tax rate; tax loss carryforward; investment behaviour (search for similar items in EconPapers)
JEL-codes: D21 H25 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-acc, nep-dcm, nep-eec, nep-pbe and nep-pub
Date: Written 2007
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