Profit Taxation, Innovation and the Financing of Heterogenous Firms
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versione breve
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Innovative firms are frequently credit constrained and tend to earn
an above normal return on capital. This paper considers a discrete
R&D decision that splits firms into innovative and standard
ones. Active intermediaries can facilitate access to credit and
improve capital allocation. We find that (i) financial development
boosts innovation and welfare; (ii) ACE and cash-flow taxes are
neutral with respect to user cost and standard firm investment but
restrict constrained investment and harm innovation and welfare;
(iii) an ACE tax is less harmful than an equal yield cash-flow tax
although they are equivalent in perfect capital markets; (iv) a
self-financed R&D tax credit redistributes towards constrained
firms and promotes innovation and welfare; (v) revenue neutral tax
cut cum base broadening similarly boosts innovation and welfare.
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tipo
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discussion paper (English)
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parole chiave
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Innovation, credit constraints, financial development, tax policy.
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data di apparenza
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10-4-2012
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pagine
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1-34
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review
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not review
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citation
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Keuschnigg, C., & Ribi, E. (2012). Profit Taxation, Innovation and
the Financing of Heterogenous Firms.
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