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Title: Technological Change and Countries' Tax Policy Design

Citation Type: Miscellaneous

Publication Year: 2019

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Abstract: We investigate whether technological change predicts tax policy changes in 34 OECD countries from 1996 to 2016. To examine tax policy reactions, we construct two new country-level indexes, one capturing tax-related investment incentives and one capturing anti-tax avoidance rules in a country. We document a decreasing trend in statutory tax rates, stable capital investment incentives, and a trend toward stricter anti-tax avoidance rules across countries over the last two decades. Our main finding is that country-specific exposure to technological change predicts variation in these trends. We find that, following technological changes, countries tighten their anti-tax avoidance rules. Cross-sectional tests show that smaller countries deviate from this general trend and use less stringent anti-tax avoidance rules. In the competition for firms' mobile capital, smaller countries thus appear to create indirect investment incentives by opting for less salient tax policy tools (i.e., anti-tax avoidance rules).

Url: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3473767

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Authors: Bruehne, Alissa; Jacob, Martin; Schütt, Harm, H

Publisher: Otto Beisheim School of Management

Data Collections: IPUMS USA

Topics: Other

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