Notching R&D Investment with Corporate Income Tax Cuts in China

• 成果类型: Article
• 署名作者: Chen, Zhao; Liu, Zhikuo; Serrato, Juan Carlos Suarez; Xu, Daniel Yi
• 署名单位: Fudan University; Duke University; National Bureau of Economic Research
• 刊物名称: AMERICAN ECONOMIC REVIEW
• ISSN/ISSBN: 0002-8282
• DOI: 10.1257/aer.20191758
• 发表日期: 2021
• 页码: 2065-2100
• 关键词: FISCAL INCENTIVES; spillovers; toolkit

摘要

We study a Chinese policy that awards substantial tax cuts to firms with R&D investment over a threshold or notch. -Quasi- experimental variation and administrative tax data show a significant increase in reported R&D that is partly driven by firms relabeling expenses as R&D. Structural estimates show relabeling accounts for 24.2 percent of reported R&D and that doubling R&D would increase productivity by 9 percent. Policy simulations show that firm selection and relabeling determine the -cost-effectiveness of stimulating R&D, that -notch-based policies are more effective than tax credits when relabeling is prevalent, and that modest spillovers justify the program from a welfare perspective.