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Xiaoyang Zhu
''Corporate tax competition and innovation: An inverted-U relationship''
( 2022, Vol. 42 No.2 )
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.
Keywords: Corporate income tax; Firm innovation; Market competition;
JEL: H2 - Taxation, Subsidies, and Revenue: General
O3 - Technological Change; Research and Development: General
Manuscript Received : Jun 30 2021 Manuscript Accepted : Jun 30 2022

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