TY  - RPRT
        AU  - Lichter, Andreas
AU  - Löffler, Max
AU  - Isphording, Ingo E.
AU  - Nguyen, Thu-Van
AU  - Poege, Felix
AU  - Siegloch, Sebastian
        TI  - Profit Taxation, R&D Spending, and Innovation
        PY  - 2021/Nov/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 14830
        UR  - https://www.iza.org/publications/dp14830
        AB  - 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.
        KW  - corporate taxation
KW  - firms
KW  - R&D
KW  - innovation
KW  - patents
        ER  -