Can Corporate Income Tax Cuts Stimulate Innovation?

There has been a growing debate among politicians and policy makers, both at the state and federal levels, about the impact of taxes on investment, growth, and firm value. The focus has been predominantly on corporate income tax cuts because, as the Congressional Budget Office (2017) reports, the U.S. has the highest top statutory corporate income tax rate among the G20 nations. Without a systematic examination, however, especially one that focuses on the long-term, it is difficult to evaluate the importance of corporate income taxes.

In our article forthcoming in the Journal of Financial and Quantitative Analysis, we contribute … Read more