Corporate taxation and capital accumulation

Stephen Bond () and Jing Xing ()
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Stephen Bond: Nuffield College, Department of Economics, and Centre for Business Taxation, University of Oxford, UK, and Institute for Fiscal Studies
Jing Xing: Nuffield College, Department of Economics, and Centre for Business Taxation, University of Oxford, UK

No 1015, Working Papers from Oxford University Centre for Business Taxation

Abstract: We present new empirical evidence that aggregate capital accumulation is strongly influenced by the user cost of capital and, in particular, by corporate tax incentives summarised in the tax-adjusted user cost. We use sectoral panel data for the USA, Japan, Australia and ten EU countries over the period 1982-2007. Our panel combines data on capital stocks, value-added and relative prices from the EU KLEMS database with measures of effective corporate tax rates from the Oxford University Centre for Business Taxation. Given the tax-adjusted user cost, we find little additional information in statutory corporate tax rates or effective average tax rates.

Keywords: capital accumulation; user cost of capital; corporate taxation (search for similar items in EconPapers)
JEL-codes: E22 E62 H25 (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (13)

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