Do Corporate Tax Cuts Increase Investments?

Dobbins, Laura; Jacob, Martin

doi:10.2139/ssrn.2362258

Cited by 4 publications

(3 citation statements)

References 35 publications

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“…The negative sign of the estimated coefficient in three specifications suggests that a weaker economy in the parent's country could lead to higher earnings on the subsidiary level. This may be the result of higher investments in a country with a strong economy, rather than in an economic downturn, as this promises higher returns (e.g., Brandstetter andJacob 2013, Becker andRiedel 2012). As foreign countries have experienced worse impact by the financial crisis than Germany has, such an influence of the GDP growth rate should rather bias my findings towards a positive result.…”

Section: Influence Of Economic Environment In Shareholder Countrymentioning

confidence: 93%

Do Corporate Tax Cuts Reduce International Profit Shifting?

Brandstetter

2014

SSRN Journal

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Applying a difference-in-differences framework with a one-onone matching strategy, which compares earnings of multinational and domestic corporations, I do not find empirical evidence that even a 10 percentage points cut in the business tax rate leads to a reduction of profit shifting activities. Terms of use: Documents in EconStor may

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Section: Influence Of Economic Environment In Shareholder Countrymentioning

confidence: 93%

Do Corporate Tax Cuts Reduce International Profit Shifting?

Brandstetter

2014

SSRN Journal

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“…Both studies, Poterba and Weisbenner (2001) and Jacob (2014), accounted for restrictions in the deductibility of capital losses.…”

Section: Prior Literaturementioning

confidence: 99%

“…34 Note that he uses data from 2001 and 2004 where short-term capital gains were tax-exempted. 35 For empirical evidence on the impact of the corporate tax rate on investment, see, e.g., Brandstetter and Jacob (2014) and Diller and Theelen (2014).…”

Section: Analytical Approachmentioning

confidence: 99%

Hold or sell? How capital gains taxation affects holding decisions

et al. 2016

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Investments with exit flexibility require decisions regarding both the investment and holding period. Because selling an investment often leads to taxable capital gains, which crucially depend on the duration of an investment, we investigate the impact of capital gains taxation on exit timing under different tax systems. We observed that capital gains taxation delays exit decisions but loses its decision relevance for very long holdings. Often the optimal exit time, which indicates the maximal present value of future cashflows, cannot be determined analytically. However, we identify the breakeven exit time that guarantees present values exceeding those of an immediate sale. While, after-taxes, an immediate sale is often optimal, long holding periods might also be attractive for investors depending on the degree of income and corporate tax integration. A classic corporate tax system often indicates holdings over more than 100 periods. By contrast, a shareholder relief system indicates the earliest breakeven exit time and thus the highest level of exit timing flexibility. Surprisingly, high retention rates are likely to accelerate sales under a classic corporate system. Additionally, the worst exit time, which should be avoided by investors, differs tremendously across tax systems. For an integrated tax system with full imputation, the worst time is reached earlier than under partial or non-integrated systems. These results could help to predict investors' behavior regarding changes in capital gains taxation and thus are of interest for both investors and tax policymakers. Furthermore, the results emphasize the need to control for the underlying tax system in cross-country empirical studies.

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