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

Michael Stimmelmayr

No 5311, CESifo Working Paper Series from CESifo

Abstract: The paper provides a comprehensive assessment of the latest German corporate income and capital tax reform, which entails a major 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, we show that economic growth and domestic welfare are negatively affected by the reform. Key to the limited growth is the domestic investors' portfolio choice as a channel for tax avoidance at the household (i.e. investor) level. While international investors may well counteract the negative impact on growth, their privileged tax treatment erodes the domestic capital income tax base and thus creates adverse welfare effects.

Keywords: portfolio investment; corporate tax reform; foreign firm ownership; computable general equilibrium (search for similar items in EconPapers)
JEL-codes: D58 F21 G11 H25 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Journal Article: Investors' Portfolio Choice and Tax Reforms: The 2008 German Corporate Tax Reform Reconsidered (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_5311

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