IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper or follow this series

How do Taxes Affect Investment and Productivity?: An Industry-Level Analysis of OECD Countries

  • Laura Vartia
Registered author(s):

    This paper analyses how different tax policies can affect investment and productivity. To address this question the paper uses industry-level data from a set of OECD countries and examines whether different industries are affected differently by taxation. Investment is shown to respond negatively to an increase in the corporate tax rate and a decrease in capital depreciation allowances through changes in the user cost of capital. The analysis of potential links between taxes and productivity tests the hypothesis that taxes affect productivity through different channels and that due to some salient industry characteristics some industries are inherently more affected than others by certain taxes. The paper finds evidence that corporate and top personal income taxes have a negative effect on productivity. In contrast, tax incentives for research and development (R&D) are found to have a positive effect on productivity. These effects are stronger in those industries that are inherently more profitable, have more entrepreneurial activity and are more R&D intensive, respectively. L'effet des politiques de taxation sur les investissements and la productivité dans les pays de l'OCDE : Une analyse sectorielle Cette étude vise à étudier l’effet des politiques de taxation sur les investissements et la productivité des entreprises. Nous utilisons des données sectorielles pour un ensemble de pays de l’OCDE et analysons dans quelle mesure l’impact de la taxation diffère selon les secteurs. Selon nos résultats, une hausse de l’impôt sur les sociétés ou une baisse des provisions pour amortissement du capital provenant de variations du coût d’usage du capital induisent une baisse de l’investissement des entreprises. Nous analysons les mécanismes de l’impact de la taxation des entreprises sur leur productivité et nous testons si certains secteurs y sont plus sensibles que d’autres. Selon nos estimations, l’impôt sur les sociétés, mais aussi les dernières tranches de l’impôt sur le revenu, ont un impact négatif sur la productivité. En revanche, les avantages fiscaux visant à promouvoir la recherche et développement semblent avoir un effet bénéfique sur la productivité. Ces effets sont plus forts dans les secteurs plus rentables, dans les secteurs caractérisés par un niveau plus élevé d’activité entrepreneuriale, et dans les secteurs caractérisés par un niveau plus élevé de recherche et développement.

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

    File URL: http://dx.doi.org/10.1787/230022721067
    Our checks indicate that this address may not be valid because: 403 Forbidden (http://dx.doi.org/10.1787/230022721067 [303 See Other]--> http://www.oecd-ilibrary.org/economics/how-do-taxes-affect-investment-and-productivity_230022721067). If this is indeed the case, please notify ()


    Download Restriction: no

    Paper provided by OECD Publishing in its series OECD Economics Department Working Papers with number 656.

    as
    in new window

    Length:
    Date of creation: 19 Dec 2008
    Date of revision:
    Handle: RePEc:oec:ecoaaa:656-en
    Contact details of provider: Postal: 2 rue Andre Pascal, 75775 Paris Cedex 16
    Phone: 33-(0)-1-45 24 82 00
    Fax: 33-(0)-1-45 24 85 00
    Web page: http://www.oecd.org
    Email:


    More information through EDIRC

    No references listed on IDEAS
    You can help add them by filling out this form.

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:oec:ecoaaa:656-en. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.