Lichter, Andreas
[Verfasser:in];
Löffler, Max
[Verfasser:in];
Isphording, Ingo Eduard
[Verfasser:in];
Nguyen, Thu-Van
[Verfasser:in];
Poege, Felix
[Verfasser:in];
Siegloch, Sebastian
[Verfasser:in]
Beschreibung:
We study how profit taxation affects plants' R&D spending and innovation activities. Relying on geocoded survey panel data which approximately covers the universe of R&D-active plants in Germany, we exploit around 7,300 changes in the municipal business tax rate over the period 1987-2013 for identification. Applying event study models, we find a negative and statistically significant effect of an increase in profit taxation on plants' R&D spending with an implied long-run elasticity of -1.25. Reductions in R&D are particularly strong among more credit-constrained plants. In contrast, homogeneity of effects across the plant size distribution questions policy makers common practice to link targeted R&D tax incentives to plant size. We further find lagged negative effects on the (citation-weighted) number of filed patents.