Corporate tax, firm destruction and capital stock accumulation: Evidence from Chilean plants
AbstractWe investigate the impact of corporate taxation on capital stock. In the paper, we indicate that corporate taxation might not only distort the decision of each firm to invest but could also destroy firms. With this in mind, we estimate capital demand equations, correcting for self-selection in the decision to produce by using the Heckman-Lee method and its panel data counterpart (Kyriadizou method). We use Chilean plant-level data , which is a period with large variability in corporate taxation. We find that corporate taxation has a considerable impact on the creation-destruction of firms and in addition, it also has an important impact on the decision of how much to invest for firms that are already involved in production.
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Bibliographic InfoPaper provided by Instituto de Economia. Pontificia Universidad Católica de Chile. in its series Documentos de Trabajo with number 364.
Date of creation: 2009
Date of revision:
Corporate taxation; capital stock;
Find related papers by JEL classification:
- H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
- D92 - Microeconomics - - Intertemporal Choice - - - Intertemporal Firm Choice, Investment, Capacity, and Financing
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