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Is There Anything Good About Corporate Tax Cut?

Author

Listed:
  • Rafi Hossain

    (The World Bank)

  • Ashikur Rahman

    (Policy Research Institute of Bangladesh)

Abstract

This paper empirically investigates if the variation in the rate of state-level corporate taxes across the U.S economy has any explanatory power in predicting the variation in R&D expenditures of all U.S. firms listed in the Compustat database. The paper provides evidence on the effects of corporate tax changes on R&D expenditures by using a difference in difference set up. The results suggest that corporate tax cuts do not affect R&D expenditures among all publicly traded firms in the U.S. while an increase in the tax rate leads to a decrease in R&D spending.

Suggested Citation

  • Rafi Hossain & Ashikur Rahman, 2021. "Is There Anything Good About Corporate Tax Cut?," Economics Bulletin, AccessEcon, vol. 41(3), pages 896-910.
    • Handle: RePEc:ebl:ecbull:eb-20-00265
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    References listed on IDEAS

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    More about this item

    Keywords

    Corporate Tax; Research and Development; Difference in Difference;
    All these keywords.

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H8 - Public Economics - - Miscellaneous Issues

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