Corporate Marginal Tax Rate, Tax Loss Carryforwards and Investment Functions: Empirical Analysis Using a Large German Panel Data Set

48 Pages Posted: 8 Jun 2016

See all articles by Fred Ramb

Fred Ramb

Deutsche Bundesbank, Economics Department, Monetary Policy and Monetary Analysis

Multiple version iconThere are 2 versions of this paper

Date Written: 2007

Abstract

This study is the first empirical analysis to investigate the relationship between the investment behaviour of firms resident in Germany and the empirically determined marginal tax rates developed by John R. Graham. It is based on the Bundesbank's corporate balance sheet statistics for the period 1971-2002. In an autoregressive distributed lag model, the marginal tax rate is shown to be significant, with an elasticity of between 0.1 and 0.2. An error correction model does not produce any plausible results for the marginal tax rate. Graham's marginal tax rates are a complement to the methods typically used to determine the effective marginal tax rates and effective average tax rates.

Keywords: Corporate marginal tax rate, tax loss carryforward, investment behaviour

JEL Classification: D21, H25

Suggested Citation

Ramb, Fred, Corporate Marginal Tax Rate, Tax Loss Carryforwards and Investment Functions: Empirical Analysis Using a Large German Panel Data Set (2007). Bundesbank Series 1 Discussion Paper No. 2007,21, Available at SSRN: https://ssrn.com/abstract=2785296

Fred Ramb (Contact Author)

Deutsche Bundesbank, Economics Department, Monetary Policy and Monetary Analysis ( email )

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