Investors' Portfolio Choice and Tax Reforms: The 2008 German Corporate Tax Reform Reconsidered

Michael Stimmelmayr

FinanzArchiv: Public Finance Analysis, 2018, vol. 74, issue 3, 376-413

Abstract: The paper provides a comprehensive assessment of the growth and welfare effects of the 2008 German corporate tax reform, which entails a shift of the capital tax burden from the firm to the household level. Using a dynamic two-country computable general-equilibrium model with integrated capital markets, the results indicate a faint growth stimulus of the reform and a negative effect on domestic welfare. In fact, the reform increased the double taxation of equity-financed corporate investment, thereby impeding firms' investment. Further, the reform-induced tax incentives for foreigners to invest in German equity undermines the financing of the reform.

Keywords: portfolio investment; corporate tax reform; foreign firm ownership; dynamic computable general-equilibrium analysis (search for similar items in EconPapers)
JEL-codes: D58 E13 G11 H25 (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (1)

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Working Paper: Investors' Portfolio Choice and Tax Reforms: The 2008 German Corporate Tax Reform Reconsidered (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:mhr:finarc:urn:sici:0015-2218(201809)73:3_376:ipcatr_2.0.tx_2-m

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DOI: 10.1628/fa-2018-0012

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