TY  - JOUR
AU  - Auerbach,Alan J.
AU  - Hassett,Kevin
AU  - Sodersten,Jan
TI  - Taxation and Corporate Investment: The Impact of the 1991 Swedish Tax   Reform
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 5189
PY  - 1996
Y2  - October 1996
UR  - http://www.nber.org/papers/w5189
L1  - http://www.nber.org/papers/w5189.pdf
N1  - Author contact info:
Alan J. Auerbach
Department of Economics
508-1 Evans Hall, #3880
University of California, Berkeley
Berkeley, CA 94720-3880
Tel: 510/643-0711
Fax: 510/643-0413
E-Mail: auerbach@econ.berkeley.edu

Kevin Hassett
American Enterprise Institute
1150 Seventeenth Street, N.W.
Washington, DC 20036
E-Mail: khassett@aei.org
AB  - In 1990, the government of Sweden introduced a major tax reform to take effect in 1991.  The Swedish system prior to the legislation was so complex that the size and magnitude of the likely effects of the reform on incentives to invest were unknown. In this paper, we draw on S”dersten (1989) and Auerbach and Hassett (1992) and derive an expression for the user cost of capital that captures the essential features of the Swedish tax code both before and after the reform.  We estimate the model for investment in equipment and find that the responsiveness of Swedish firms to the user cost is quite similar to that found for the U.S.  Finally, we employ our model and estimates to assess the effects of the 1991 reform.  We find that the impact of the reform on investment is likely to have been minor and had little to do with the contemporaneous sharp drop in investment.
ER  -