TY - JOUR
T1 - Macroeconomic effects of corporate tax policy
AU - Shevlin, Terry
AU - Shivakumar, Lakshmanan
AU - Urcan, Oktay
N1 - We appreciate helpful comments and suggestions from SP Kothari (the editor), Gil Sadka (the referee), Karthik Balakrishnan, Andrew Bird (discussant), Elizabeth Chorvat, Will Ciconte, Jon Davis, Paul Demere, Charlene Henderson, Kerry Inger (discussant), Martin Jacob, Laura Li, Pete Lisowsky, Tom Neubig (discussant), Tom Omer, Catherine Schrand, Bill Snyder, Tanya Tang, Florin Vasvari, Luo Zuo (discussant), members of WHU Tax Reading Group, workshop participants at London Business School, University of Connecticut, University of Illinois at Urbana-Champaign and participants at 2016 AAA Annual Meeting in New York, 2016 FARS Midyear Meeting in Charlotte, 2016 FEA Conference at the University of Toronto, 2016 Oklahoma State University Accounting Research Conference, and 2016 Texas/Waterloo Tax Symposium. We thank SeoSun Cheong and Weiliang Zhang for excellent research assistance. The authors acknowledge financial support from each of their universities.
PY - 2019/8
Y1 - 2019/8
N2 - Prior studies on the relation between corporate taxes and future macroeconomic growth present contradictory evidence. We argue this mixed evidence is at least partly due to the use of statutory corporate tax rates which ignore the complexity of tax exemptions, tax deductions, tax enforcement and firms’ tax planning. We propose an alternative tax rate measure that aggregates cash effective tax rates of listed firms, which reflect not only statutory tax rates, but also other features of the tax code, enforcement, and firms' tax planning. We find a strong robust negative relation between country-level effective tax rates and future macroeconomic growth.
AB - Prior studies on the relation between corporate taxes and future macroeconomic growth present contradictory evidence. We argue this mixed evidence is at least partly due to the use of statutory corporate tax rates which ignore the complexity of tax exemptions, tax deductions, tax enforcement and firms’ tax planning. We propose an alternative tax rate measure that aggregates cash effective tax rates of listed firms, which reflect not only statutory tax rates, but also other features of the tax code, enforcement, and firms' tax planning. We find a strong robust negative relation between country-level effective tax rates and future macroeconomic growth.
KW - Corporate tax policy
KW - Investment efficiency
KW - Macroeconomic growth
UR - https://www.scopus.com/pages/publications/85064564470
UR - https://www.scopus.com/pages/publications/85064564470#tab=citedBy
U2 - 10.1016/j.jacceco.2019.03.004
DO - 10.1016/j.jacceco.2019.03.004
M3 - Article
AN - SCOPUS:85064564470
SN - 0165-4101
VL - 68
JO - Journal of Accounting and Economics
JF - Journal of Accounting and Economics
IS - 1
M1 - 101233
ER -