Consumption Taxes and Corporate Investment
Abstract
While consumers pay consumption taxes, the corporate sector may partly bear them, reducing capital returns and investment. Exploiting 95 consumption tax changes in a worldwide firm-panel as well as one local quasi-natural experiment, we show that consumption taxes decrease corporate investment. Firms facing elastic demand decrease investment more strongly because they can pass less of the consumption tax on to consumers. Similarly, firms with...
Paper Details
Title
Consumption Taxes and Corporate Investment
Published Date
Jan 1, 2017
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