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Macroeconomic Implications of Changes in Corporate Tax Rates: A Review

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  • Sacchidananda Mukherjee
  • Shivani Badola

Abstract

Many countries have initiated structural reforms in corporate income tax (CIT) to attract investment and promote growth. There has been a continuous decline in CIT rates worldwide. It is expected that cuts in CIT rates may increase after‐tax profits and encourage investment. A change in the CIT rate may also be shifted backward (by changing salaries and wages) and/or forward (by changing product prices). These are theoretical possibilities and may not have support from empirical evidence. In this paper we review empirical studies to assess the impact of CIT rate changes on the economy.

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  • Sacchidananda Mukherjee & Shivani Badola, 2023. "Macroeconomic Implications of Changes in Corporate Tax Rates: A Review," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 56(1), pages 20-41, March.
    • Handle: RePEc:bla:ausecr:v:56:y:2023:i:1:p:20-41
    DOI: 10.1111/1467-8462.12497
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