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The additionality of R&D tax policy: Quasi-experimental evidence

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  • Holt, Jared
  • Skali, Ahmed
  • Thomson, Russell

Abstract

Despite the prevalence of R&D tax incentives, the amount of additional investment induced by each dollar of tax revenue forgone remains contested. It is notoriously difficult to identify the impact of R&D tax incentives because all firms are potentially eligible and because benefit and investment are jointly determined. Using comprehensive, firm-level data, we apply difference-in-difference analysis around a significant policy reform in Australia in 2012. We find that firms invest an additional $1.90 for every dollar of tax revenue forgone.

Suggested Citation

  • Holt, Jared & Skali, Ahmed & Thomson, Russell, 2021. "The additionality of R&D tax policy: Quasi-experimental evidence," Technovation, Elsevier, vol. 107(C).
    • Handle: RePEc:eee:techno:v:107:y:2021:i:c:s0166497221000742
    DOI: 10.1016/j.technovation.2021.102293
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    References listed on IDEAS

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    Cited by:

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    2. Carmen Elena Stoenoiu, 2022. "Sustainable Development—A Path to a Better Future," Sustainability, MDPI, vol. 14(15), pages 1-13, July.

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    More about this item

    Keywords

    R&D tax policy; Firm-level; Innovation; Difference-in-Differences;
    All these keywords.

    JEL classification:

    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy

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