Data and Code for: Downward Revision of Investment Decisions after Corporate Tax Hikes

Principal Investigator(s): View help for Principal Investigator(s) Sebastian Link, ifo Institute, LMU Munich, CESifo, IZA; Manuel Menkhoff, ifo Institute; Andreas Peichl, ifo Institute, LMU Munich, IZA, CESifo; Paul Schüle, ifo Institute

Version: View help for Version V1

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Project Description

Summary: This paper estimates the causal effect of corporate tax hikes on firm investment based on more than 1,400 local tax changes. By observing planned and realized investment volumes in a representative sample of German manufacturing firms, we can study how tax hikes induce firms to revise their investment decisions. On average, the share of firms that invest less than previously planned increases by three percentage points after a tax hike. This effect is twice as large during recessions.

Scope of Project

Subject Terms: Corporate Taxation; State Dependence; Business Cycle

JEL Classification:
      G11 Portfolio Choice; Investment Decisions
      H25 Business Taxes and Subsidies including sales and value-added (VAT)
      H32 Fiscal Policies and Behavior of Economic Agents: Firm
      H71 State and Local Taxation, Subsidies, and Revenue
      O16 Economic Development: Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

Geographic Coverage: Germany

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Published Versions

V1 [2024-10-25]

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DDI 2.5

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