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| Xiaoyang Zhu |
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| ''Corporate tax competition and innovation: An inverted-U relationship'' |
| ( 2022, Vol. 42 No.2 ) |
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| This paper studies how the downward corporate tax rate affects firms' innovations. Using a cross-country firm-level panel, we find that both higher and lower corporate income-tax could hinder firm innovations, which implies an inverted-U relationship between the statutory corporate income-tax rate and firm innovation. A potential explanation of nonlinearity is that a lower tax rate alters the market structure.
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| Keywords: Corporate income tax; Firm innovation; Market competition; |
JEL: H2 - Taxation, Subsidies, and Revenue: General
O3 - Technological Change; Research and Development: General |
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| Manuscript Received : Jun 30 2021 | | Manuscript Accepted : Jun 30 2022 |
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