Do Tax Incentives Reduce Investment Quality?

Investment incentives and corporate tax asymmetries

a r t i c l e i n f o Recent facts on the importance of corporate losses motivate more careful study of the impact of tax incentives for investment on firms that lose money. I model firm investment decisions in a setting featuring financing constraints and carrybacks and carryforwards of operating losses. I estimate investment responses to tax incentives allowing effects to vary with cash flows...

Temporary Investment Tax Incentives: Theory with Evidence from Bonus Depreciation

There are strong incentives to delay or accelerate investment to take advantage of predictable changes in after-tax prices. For sufficiently long-lived capital goods, these incentives are so strong that the intertemporal elasticity of investment demand is nearly infinite. For temporary tax changes, the equilibrium shadow price of long-lived capital goods should fully reflect the tax subsidy reg...

Unionisation Triggers Tax Incentives to Attract Foreign Direct Investment

This paper analyses tax competition between a unionised and a non-unionised country for the location of an outside firm. We show that unionisation offers an extra incentive for the government to attract a foreign competitor to a concentrated domestic market, in order to affect the behaviour of the domestic union. This results in the unionised country’s government offering a tax discount (or a s...

The 'fat Tax': Economic Incentives to Reduce Obesity

Tax Incentives to Encourage

Much has been said about the importance of innovation, especially after the rise of globalization and implementation of more open markets. In this paper, we will show how innovation is linked to schools of thoughts that sought to explain and understand what would lead nations to reach a certain degree of long-term development, since the model of Joseph Schumpeter in the mid-1930s until Romer’s ...