Corporate Tax Minimization and the Effectiveness of Investment Tax Incentives

Proceedings of the 100th Annual Conference on Taxation

11 Pages Posted: 6 Nov 2013 Last revised: 9 Nov 2013

See all articles by Estelle P. Dauchy

Estelle P. Dauchy

Campaign for Tobacco Free Kids

Claudia Martinez

University of Chile - Department of Economics

Date Written: November 5, 2008

Abstract

Clarifying the relationship between corporate tax minimization and the incentive to invest is particularly important because of the size of corporate tax minimization or avoidance and the recurrent use of tax incentives as attempts to spur business investment. In this paper, we empirically estimate the effect of an investment tax incentive known as the bonus depreciation that was passed in 2002, and extended in 2003 using firm level data. In our most robust specifications we find a small but not significant effect of bonus depreciation on investment and a small but not significant evidence that tax minimization opportunities have mitigated its effectiveness.

Keywords: Bonus Depreciation, Investment Tax Incentives, Corporate Taxation, Tax Avoidance

JEL Classification: H25, G31, E01

Suggested Citation

Dauchy, Estelle P. and Martinez, Claudia, Corporate Tax Minimization and the Effectiveness of Investment Tax Incentives (November 5, 2008). Proceedings of the 100th Annual Conference on Taxation. Available at SSRN: https://ssrn.com/abstract=2350117

Estelle P. Dauchy (Contact Author)

Campaign for Tobacco Free Kids ( email )

1400 I Street NW
Suite 1200
Washington, DC New York 20005
United States
5857542532 (Phone)

Claudia Martinez

University of Chile - Department of Economics

Diagonal Paraguay 257
Torre 26, Of. 1801
Santiago
Chile

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
42
Abstract Views
365
PlumX Metrics