Is There Anything Good About Corporate Tax Cut?

Rafi Hossain () and Ashikur Rahman ()
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Rafi Hossain: The World Bank
Ashikur Rahman: Policy Research Institute of Bangladesh

Economics Bulletin, 2021, vol. 41, issue 3, 896-910

Abstract: This paper empirically investigates if the variation in the rate of state-level corporate taxes across the U.S economy has any explanatory power in predicting the variation in R&D expenditures of all U.S. firms listed in the Compustat database. The paper provides evidence on the effects of corporate tax changes on R&D expenditures by using a difference in difference set up. The results suggest that corporate tax cuts do not affect R&D expenditures among all publicly traded firms in the U.S. while an increase in the tax rate leads to a decrease in R&D spending.

Keywords: Corporate Tax; Research and Development; Difference in Difference (search for similar items in EconPapers)
JEL-codes: H2 H8 (search for similar items in EconPapers)
Date: 2021-07-18
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