@TechReport{iza:izadps:dp14830,
            	author={Lichter, Andreas and Löffler, Max and Isphording, Ingo E. and Nguyen, Thu-Van and Poege, Felix and Siegloch, Sebastian},
            	title={Profit Taxation, R&D Spending, and Innovation},
            	year={2021},
	month={Nov},
            	institution={Institute of Labor Economics (IZA)},
            	address={Bonn},
            	type={IZA Discussion Paper},
            	number={14830},
            	url={https://www.iza.org/publications/dp14830},
	abstract={We study how profit taxation affects plants' R&D spending and innovation activities. Relying on geocoded survey panel data which approximately covers the universe of R&D-active plants in Germany, we exploit around 7,300 changes in the municipal business tax rate over the period 1987–2013 for identification. Applying event study models, we find a negative and statistically significant effect of an increase in profit taxation on plants' R&D spending with an implied long-run elasticity of −1.25. Reductions in R&D are particularly strong among more credit-constrained plants. In contrast, homogeneity of effects across the plant size distribution questions policy makers common practice to link targeted R&D tax incentives to plant size. We further find lagged negative effects on the (citation-weighted) number of filed patents.},
	keywords={corporate taxation;firms;R&D;innovation;patents},
            }