Do corporate tax cuts increase investments?

Abstract

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Tax rate cut and firm investment: evidence from Thailand

“…This suggests that the tax cuts from the relatively high level of tax rate could provide large impacts on investment of local firms. This finding is consistent with that of Dobbins and Jacob (2016) are consequently likely to exhibit stronger investment response.…”

“…There is, however, a relatively limited empirical evidence on the effects of direct cut in the statutory tax rate, especially that of the developing world. Dobbins and Jacob (2016), for example, shows that the German tax rate cut has a strong impact on investment of local firms. This represents an important gap in the literature since studies have shown that the tax sensitivity could vary with the country's development level (see, for example, Mutti and Grubert 2004) and the cuts in the corporate tax rate have been proposed in many developing countries as a way to boost private investment.…”

A review of earnings management in private firms in response to tax rate changes

“…Since the beginning of the 21st century, there has been significant changes in national corporate income tax rates worldwide. The underlying reason for these changes is that countries aspired to attract investment and stimulate business growth, which has resulted in a major trend toward decreasing the tax rates that firms pay for their profits (Dobbins and Jacob 2016). For example, the average corporate tax rate (CTR) was 30.42 percent in 2000 and 22.43 percent in 2017 for the Organisation for Economic Co-operation and Development (OECD) member countries.…”

The combined impacts of fiscal and credit policies on green firm's investment opportunity: Evidences from Chinese firm‐level analysis

“…Tax rebates are policy incentives that encourage green investment activities, and they decrease tax liability and the financing costs of green investment activities (Dobbins & Jacob, 2016; Maffini et al, 2019; Tian, 2018). Third, government subsidies and tax rebates are beneficial market signals that imply better investment prospects and higher profitability for external investors (Chen et al, 2018; Wu, 2017).…”

“…Private family firms avoid taxes less than public family and nonfamily firms (Brune et al, 2019). Tax cuts and credits generate an important impact on firm investments and capital allocation (Altug et al, 2009; Ayuso et al, 2018; Danielova & Sarkar, 2011; Dobbins & Jacob, 2016; Haga et al, 2019; Hines & Park, 2019; Marekwica, 2012; Muthitacharoen, 2021; Sarkar, 2012). Payout and repatriation taxes have a large impact on firm investment activity (Becker et al, 2013; Hanlon et al, 2015).…”