The Effect of Corporate Taxes on Investment and Entrepreneurship

Rita Rmalho, Tim Christian Ganser, Andrei Shleifer, Caralee McLiesh and Simeon Djankov

Scholarly Articles from Harvard University Department of Economics

Abstract: We present new data on effective corporate income tax rates in 85 countries in 2004. The data come from a survey, conducted jointly with PricewaterhouseCoopers, of all taxes imposed on "the same" standardized mid-size domestic firm. In a cross-section of countries, our estimates of the effective corporate tax rate have a large adverse impact on aggregate investment, FDI, and entrepreneurial activity. Corporate tax rates are correlated with investment in manufacturing but not services, as well as with the size of the informal economy. The results are robust to the inclusion of many controls. (JEL E22, F23, G31, H25, H32, L26)

Date: 2010
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Citations: View citations in EconPapers (281)

Published in American Economic Journal: Macroeconomics

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Related works:
Journal Article: The Effect of Corporate Taxes on Investment and Entrepreneurship (2010)
Working Paper: The Effect of Corporate Taxes on Investment and Entrepreneurship (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:hrv:faseco:8705900

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