Downward Revision of Investment Decisions after Corporate Tax Hikes

Sebastian Link, Manuel Menkhoff, Andreas Peichl, Paul Schüle and Lukas Menkhoff

No 9786, CESifo Working Paper Series from CESifo

Abstract: This paper estimates the causal effect of corporate tax hikes on firm investment based on more than 1,400 local tax changes. By observing planned and realized investment volumes in a representative sample of German manufacturing firms, we can study how tax hikes induce firms to revise their investment decisions. On average, the share of firms that invest less than previously planned increases by three percentage points after a tax hike. This effect is twice as large during recessions.

Keywords: investment; corporate taxation; state dependence; business cycle (search for similar items in EconPapers)
JEL-codes: G11 H25 H32 H71 O16 (search for similar items in EconPapers)
Date: 2022
New Economics Papers: this item is included in nep-cfn, nep-eur, nep-pbe and nep-pub
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Downward Revision of Investment Decisions after Corporate Tax Hikes (2024)
Working Paper: Downward Revision of Investment Decisions after Corporate Tax Hikes (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_9786

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