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Investors' Portfolio Choice and Tax Reforms: The 2008 German Corporate Tax Reform Reconsidered

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  • Michael Stimmelmayr

Abstract

The paper provides a comprehensive assessment of the growth and welfare effects of the 2008 German corporate tax reform, which entails a shift of the capital tax burden from the firm to the household level. Using a dynamic two-country computable general-equilibrium model with integrated capital markets, the results indicate a faint growth stimulus of the reform and a negative effect on domestic welfare. In fact, the reform increased the double taxation of equity-financed corporate investment, thereby impeding firms' investment. Further, the reform-induced tax incentives for foreigners to invest in German equity undermines the financing of the reform.

Suggested Citation

  • Michael Stimmelmayr, 2018. "Investors' Portfolio Choice and Tax Reforms: The 2008 German Corporate Tax Reform Reconsidered," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 74(3), pages 376-413, September.
    • Handle: RePEc:mhr:finarc:urn:sici:0015-2218(201809)73:3_376:ipcatr_2.0.tx_2-m
    DOI: 10.1628/fa-2018-0012
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    Cited by:

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    2. Schock, Matthias Malte, 2019. "Steuerreformvorschläge des Mirrlees Committee und der Stiftung Marktwirtschaft [Tax Reform Proposals of the Mirrlees Committee and the Stiftung Marktwirtschaft]," MPRA Paper 96689, University Library of Munich, Germany.

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    More about this item

    Keywords

    portfolio investment; corporate tax reform; foreign firm ownership; dynamic computable general-equilibrium analysis;
    All these keywords.

    JEL classification:

    • E13 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Neoclassical
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models

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