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ResearchPaper
2013
Corporate taxation and the quality of research and development
Corporate taxation and the quality of research and development
Abstract (English)
This paper examines the impact of tax incentives on corporate research and development (R&D) activity. Traditionally, R&D tax incentives have been provided in the form of special tax allowances and tax credits. In recent years, several countries moreover reduced their income tax rates on R&D output. Previous papers have shown that all three tax instruments are effective in raising the quantity of R&D related activity. We provide evidence that, beyond this quantity effect, corporate taxation also distorts the quality of R&D projects, i.e. their innovativeness and revenue potential. Using rich data on corporate patent applications to the European patent office, we find that a low tax rate on patent income is instrumental in attracting innovative projects with a high earnings potential and innovation level. The effect is statistically significant and economically relevant and prevails in a number of sensitivity checks. R&D tax credits and tax allowances are in turn not found to exert a statistically significant impact on project quality.
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Notes
Publication license
Publication series
FZID discussion papers; 66
Published in
Faculty
State Institutes
Faculty of Business, Economics and Social Sciences
Faculty of Business, Economics and Social Sciences
Institute
Forschungszentrum Innovation und Dienstleistung
Institute of Economics
Institute of Economics
Examination date
Supervisor
Edition / version
Citation
Identification
DOI
ISSN
ISBN
Language
English
Publisher
Publisher place
Classification (DDC)
330 Economics
Original object
Free keywords
Standardized keywords (GND)
Sustainable Development Goals
BibTeX
@techreport{Riedel2013,
url = {https://hohpublica.uni-hohenheim.de/handle/123456789/5678},
author = {Riedel, Nadine and Richter, Katharina and Ernst, Christof et al.},
title = {Corporate taxation and the quality of research and development},
year = {2013},
school = {Universität Hohenheim},
series = {FZID discussion papers},
}