Graduate School of Arts and Sciences
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Institutional Affiliation: Harvard University
NBER Working Papers and Publications
|January 2008||The Effect of Corporate Taxes on Investment and Entrepreneurship|
with Simeon Djankov, Caralee McLiesh, Rita Ramalho, Andrei Shleifer: w13756
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...
Published: Simeon Djankov & Tim Ganser & Caralee McLiesh & Rita Ramalho & Andrei Shleifer, 2010.
"The Effect of Corporate Taxes on Investment and Entrepreneurship,"
American Economic Journal: Macroeconomics,
American Economic Association, vol. 2(3), pages 31-64, July.
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