The Role of Personal Income Taxes in Corporate Investment Decisions

Jacob, Martin; Vossebürger, Robert

doi:10.2139/ssrn.3744357

Cited by 2 publications

(2 citation statements)

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“…The coefficient of industry-level regressions of fixed tangible capital on the number of employees to proxy for the association between changes in labor and capital inputs (following Jacob and Vossebuerger, 2021).…”

Section: Dependent Variables Exports (Bn)mentioning

confidence: 99%

“…In Columns (3) and (4) of Panel (A), the sample splits are taken within each country-industry-year cell. In Panel (B), Capital-Labor Complementary is based on the coefficient of regressions of capital on labor to proxy for the association between changes in labor and capital inputs (following Jacob and Vossebuerger, 2021). Sample splits are based on median splits, i.e., "High" indicates that firm-years are above median.…”

Section: Dependent Variables Exports (Bn)mentioning

confidence: 99%

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Tax Competition and Employment

Glaeser

Olbert

Werner

2023

The Accounting Review

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We examine how exposure to international tax competition affects domestic firms’ employment. Consistent with prior work, we find evidence that reductions in foreign tax rates affect the domestic competitive environment via increases in import competition and investment in foreign-owned subsidiaries. We posit that these changes in the domestic competitive environment can cause managers to reduce their firms’ employment levels. Consistent with our expectation, we find that relative decreases in foreign tax rates negatively affect total labor compensation at domestic firms ex ante exposed to import competition and competition from foreign-owned peers. The effect of exposure to tax competition is greater for firms more exposed to product-market competition and those that are less able to expand investment without also increasing employment levels. Taken together, our results suggest that foreign tax rate changes can affect managers’ domestic employment decisions by changing the domestic competitive environment. JEL Classifications: E24; F14; F16; H23; H35.

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Section: Dependent Variables Exports (Bn)mentioning

confidence: 99%

Section: Dependent Variables Exports (Bn)mentioning

confidence: 99%