%0 Report
        %A Lichter, Andreas
%A Löffler, Max
%A Isphording, Ingo E.
%A Nguyen, Thu-Van
%A Poege, Felix
%A Siegloch, Sebastian
        %T Profit Taxation, R&D Spending, and Innovation
        %D 2021
        %8 2021 Nov
        %I Institute of Labor Economics (IZA)
        %C Bonn
        %7 IZA Discussion Paper
        %N 14830
        %U https://www.iza.org/publications/dp14830
        %X 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.
        %K corporate taxation
%K firms
%K R&D
%K innovation
%K patents