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Rafi Hossain and Ashikur Rahman
''Is There Anything Good About Corporate Tax Cut?''
( 2021, Vol. 41 No.3 )
This paper empirically investigates if the variation in the rate of state-level corporate taxes across the U.S economy has any explanatory power in predicting the variation in R&D expenditures of all U.S. firms listed in the Compustat database. The paper provides evidence on the effects of corporate tax changes on R&D expenditures by using a difference in difference set up. The results suggest that corporate tax cuts do not affect R&D expenditures among all publicly traded firms in the U.S. while an increase in the tax rate leads to a decrease in R&D spending.
Keywords: Corporate Tax, Research and Development, Difference in Difference
JEL: H2 - Taxation, Subsidies, and Revenue: General
H8 - Public Economics: Miscellaneous Issues: General
Manuscript Received : Mar 27 2020 Manuscript Accepted : Jul 18 2021

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