The Impact of Investment Incentives: Evidence from UK Corporation Tax Returns
By G. Maffini, Jing Xing, Michael P. Devereux. American Economic Journal: Economic Policy, 2019
111 citations recorded by the source corpus.
Using UK corporation tax returns, we provide evidence on the effects of accelerated depreciation allowances on investment, exploiting exogenous changes in the qualifying thresholds for first-year depreciation allowances (FYAs) in 2004. The investment rate of qualifying companies increased by 2.1–2.5 percentage points relative to those that did not qualify. We exploit variation in the timing of tax payments to show that this effect is primarily due to the change in the cost of capital, rather than a relaxation of financial constraints. Discontinuity at notches in the cost of capital at the qualifying thresholds does not affect our results. (JEL D25, G31, H25, H32)
Subfields: Accounting, Economics and Econometrics
View Paper: https://www.semanticscholar.org/paper/0f750c60d25634a9eb277c60ec9510902769d857
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Citations in the corpus
- Comparing UK Tax Returns of Foreign Multinationals to Matched Domestic Firms (2019, unknown): “…taxable profits distribution, where the accounting profits distribution indicates 22For additional evidence on the discrepancies between tax and accounting profits see Devereux et al. (2015) and Maffini et al. (2016). that companies report much higher ratio of accounting profits to total assets.”
- The effect of tax incentives on U.S. manufacturing: Evidence from state accelerated depreciation policies (2019, methodology): “The investment elasticities produced by this study are similar to those in Zwick and Mahon (2017) and Maffini et al. (2017) and reinforce the latest, state-of-the-art estimates of the effect of depreciation allowances on investment. This paper also adds to the corporate tax incidence literature.2 Be”
- Tax Policy and Local Labor Market Behavior (2019, background): “First, we contribute to a growing literature that studies the impacts of accelerated depreciation policies by providing the first systematic analysis of the effects of federal bonus depreciation on the labor market (Hall and Jorgenson, 1967; Cummins et al., 1994; House and Shapiro, 2008; Edgerton, 2”