TY  - JOUR
AU  - Djankov,Simeon
AU  - Ganser,Tim
AU  - McLiesh,Caralee
AU  - Ramalho,Rita
AU  - Shleifer,Andrei
TI  - The Effect of Corporate Taxes on Investment and Entrepreneurship
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 13756
PY  - 2008
Y2  - January 2008
UR  - http://www.nber.org/papers/w13756
L1  - http://www.nber.org/papers/w13756.pdf
N1  - Author contact info:
Simeon Djankov
min
E-Mail: sdjankov@minfin.bg

Tim Ganser
Graduate School of Arts and Sciences
Harvard University
1350 Massachusetts Avenue
Holyoke Center 350
Cambridge, MA 02138
E-Mail: tganser@fas.harvard.edu

Caralee McLiesh
The World Bank
1818 H Street
Washington, DC 20433
E-Mail: cmcliesh@worldbank.org

Rita Ramalho
The World Bank
1818 H Street
Washington, DC 20433
E-Mail: rramalho@worldbank.org

Andrei Shleifer
Department of Economics
Harvard University
Littauer Center M-9
Cambridge, MA 02138
Tel: 617/495-5046
Fax: 617/496-1708
E-Mail: ashleifer@harvard.edu
AB  - 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.  For example, a 10 percent increase in the effective corporate tax rate reduces aggregate investment to GDP ratio by 2 percentage points.  Corporate tax rates are also negatively correlated with growth, and positively correlated with the size of the informal economy.  The results are robust to the inclusion of controls for other tax rates, quality of tax administration, security of property rights, level of economic development, regulation, inflation, and openness to trade.
ER  -