The effect of tax incentives on U.S. manufacturing: Evidence from state accelerated depreciation policies
By Eric Ohrn. 2019
114 citations recorded by the source corpus.
Abstract Accelerated depreciation policies decrease the cost of new investments by allowing firms to deduct the new investments from their taxable income more quickly. Countries around the world use these policies to stimulate business investment. To date, almost all empirical evidence of the effect of these policies relies on cross-industry variation in their generosity. Using a modified difference-in-differences framework, this paper estimates the effects of state adoption of federal accelerated depreciation policies on the U.S. manufacturing sector. The results based on this alternative source of quasi-experimental variation reinforce findings from the cross-industry literature and suggest that accelerated depreciation policies have large and significant effects on capital investment.
Subfields: Accounting, Economics and Econometrics
View Paper: https://www.semanticscholar.org/paper/ddac119c405eba2ec1fc82b1ec682985cc643a86
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Citations in the corpus
- The Effect of Corporate Taxation on Investment and Financial Policy: Evidence from the DPAD (2018, methodology): “—The closest estimates of the impact of the DPAD on investment come from Lester (2015), which finds that DPAD reporting firms increased domestic investment by 3.19 cents per dollar of installed capital for each 1 percentage point DPAD reduction they receive. I find that domestic investment increased”
- The Impact of Investment Incentives: Evidence from UK Corporation Tax Returns (2019, methodology): “Our findings reinforce results in existing studies on the effectiveness of accelerated depreciation allowances on stimulating private investment (Cummins et al., 1994; House and Shapiro, 2008; Edgerton, 2010; Zwick and Mahon, 2017; and Ohrn, 2018a, b).”