Journal of Accounting and Economics Vol. 68 No. 1 2019

Macroeconomic effects of corporate tax policy

Terry Shevlin¹; Lakshmanan Shivakumar²; Oktay Urcan³

¹ University of California, Irvine · ² London Business School · ³ University of Illinois Urbana-Champaign

Abstract

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 firms' tax planning. We find a strong robust negative relation between country-level effective tax rates and future macroeconomic growth.

DOI

10.1016/j.jacceco.2019.03.004

Volume

68

Issue

1

Pages

101233

Language

en

Sources

bibtex:phds-export.bib openalex crossref

Cite

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