Consumption Taxes and Corporate Investment

• 成果类型: Article
• 署名作者: Jacob, Martin; Michaely, Roni; Mueller, Maximilian A.
• 署名单位: WHU - Otto Beisheim School of Management; University of Geneva
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hhy132
• 发表日期: 2019
• 页码: 3144
• 关键词: fiscal-policy; SALES TAXES; prices; state; REFORM

摘要

Consumers nominally pay the consumption tax, but theoretical and empirical evidence is mixed on whether corporations partly shoulder this burden, thereby affecting corporate investment. Using a quasi-natural experiment, we show that consumption taxes decrease investment. Firms facing more elastic demand decrease investment more strongly, because they bear more of the consumption tax. We corroborate the validity of our findings using 86 consumption tax changes in a cross-country panel. We document two mechanisms underlying the investment response: reduced firms' profitability and lower aggregate consumption. Importantly, the magnitude of the investment response to consumption taxes is similar to that of corporate taxes.