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Macroeconomic effects of corporate tax policy

Journal

Journal of Accounting and Economics

Subject

Accounting

Publishing details

Journal of Accounting and Economics 2019 Vol 68:1 p 101233

Authors / Editors

Shevlin T J;Shivakumar L;Urcan O

Biographies

Lakshmanan Shivakumar

Publication Year

2019

Abstract

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 firm's tax planning. We find a strong robust negative relation between country-level effective tax rates and future macroeconomic growth.

Publication Notes

Corporate tax policy; Macroeconomic growth; Investment efficiency

Available on ECCH

No


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