Macroeconomic effects of corporate tax policy

Shevlin, T, Shivakumar, L and Urcan, O (2019) Macroeconomic effects of corporate tax policy. Journal of Accounting and Economics, 68 (1). ISSN 0165-4101 OPEN ACCESS


Prior studies on the relation between corporate taxes and future macroeconomic growth present contradictory evidence. We argue this mixed evidence is at least partly due to the use of statutory corporate tax rates which ignore the complexity of tax exemptions, tax deductions, tax enforcement and firms’ tax planning. We propose an alternative tax rate measure that aggregates cash effective tax rates of listed firms, which reflect not only statutory tax rates, but also other features of the tax code, enforcement, and firm's tax planning. We find a strong robust negative relation between country-level effective tax rates and future macroeconomic growth.

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Item Type: Article
Subject Areas: Accounting
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© 2019. This manuscript version is made available under the CC-BY-NC-ND 4.0 license

Date Deposited: 03 Apr 2019 19:52
Date of first compliant deposit: 03 Apr 2019
Subjects: Investment appraisal
Corporation taxes
Last Modified: 10 Jun 2024 00:39

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