The Effects of Corporate Taxes on Small Firms

Jarkko Harju, Aliisa Koivist and Tuomas Matikka

No 2234, Working Papers from Tampere University, Faculty of Management and Business, Economics

Abstract: We study the impact of corporate taxes on firm-level investments and business activity by exploiting a 6 percentage-point reduction in the corporate tax rate during 2012–2014 in Finland. We use detailed administrative data and a difference-in-differences method comparing small corporations (tax rate cuts) to similar partnerships (no change in taxes). We find no significant average investment responses but do observe an average increase in annual sales and variable costs. These effects are driven by more cash-constrained firms and firms where the main owner actively works in the firm.

JEL-codes: G31 G38 H21 H25 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2022-01
New Economics Papers: this item is included in nep-acc, nep-cfn, nep-cwa, nep-ent, nep-pbe, nep-pub and nep-sbm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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http://urn.fi/URN:ISBN:978-952-03-2273-1 First version, 2022 (application/pdf)

Related works:
Journal Article: The effects of corporate taxes on small firms (2022)
Working Paper: The Effects of Corporate Taxes on Small Firms (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:tam:wpaper:2234

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