Loss-offset provisions in the corporate tax code and misallocation of capital

• 成果类型: Article
• 署名作者: Kaymak, Baris; Schott, Immo
• 署名单位: Universite de Montreal; Universite de Montreal
• 刊物名称: JOURNAL OF MONETARY ECONOMICS
• ISSN/ISSBN: 0304-3932
• DOI: 10.1016/j.jmoneco.2019.04.011
• 发表日期: 2019
• 页码: 1-20
• 关键词: Corporate taxation; Capital misallocation; Tax reform

摘要

The corporate tax code allows corporations to write off operating losses against past or future tax obligations, resulting in effective tax rates that are firm-specific and dependent on the history of the firm's performance. Since losses partly reflect a drop in productivity, which is generally persistent, firms with higher expected productivity face higher tax rates. We analyze the distortionary effects of loss-offset provisions on investment and assess the output loss implied by the misallocation of capital. Replacing the corporate income tax with a revenue-neutral value-added tax which equates tax rates across firms leads to a 13.9% increase in aggregate output. (C) 2019 Elsevier B.V. All rights reserved.