Title The Right Kind of Help? : Tax Incentives for Staying Small / by Dora Benedek [and five others]

Published [Washington, D.C.] : International Monetary Fund, [2017]

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Description 1 online resource (33 pages) Series IMF Working Papers, 1018-5941 ; WP/17/139 IMF working paper ; no. 17/139 Contents Cover; Contents; Abstract; I. Introduction; II. Methodology, Data, and Empirical Strategy; A. Methodology; B. Data and Empirical Strategy; III. Stylized Facts; IV. Estimation Results; V. Conclusions; References; Figures; 1. Average Size-Related CIT Tax Incentives and Firm Growth; 2. Firm Performance; 3. Size-Related Tax Incentives; 4. Other Control Factors; 5. Estimation Results: Factors of Firm Productivity and Growth; 6. Determinants of TFP Growth; 7. Counterfactual Exercise: TFP Gains; Appendices; I. Methodology; II. Data Sources and Parametrization Summary Some countries support smaller firms through tax incentives in an effort to stimulate job creation and startups, or alleviate specific distortions, such as financial constraints or high regulatory or tax compliance costs. In addition to fiscal costs, tax incentives that discriminate by firm size without specifically targeting R & D investment can create disincentives for firms to invest and grow, negatively affecting firm productivity and growth. This paper analyzes the relationship between size-related corporate income tax incentives and firm productivity and growth, controlling for other policy and firm-level factors, including product market regulation, financial constraints and innovation. Using firm level data from four European economies over 2001-13, we find evidence that size-related tax incentives that do not specifically target R & D investment can weigh on firm productivity and growth. These results suggest that when designing size-based tax incentives, it is important to address their potential disincentive effects, including by making them temporary and targeting young and innovative firms, and R & D investment explicitly Notes III. Econometric Results and Robustness Checks Print version record Subject All Countries. Growth. Fiscal Reforms. Corporate Income Taxes. Form Electronic book Author Budina, Nina, author Deb, Pragyan, author Gracia, Borja, author Saksonovs, Sergejs, author Shabunina, Anna, author ISBN 9781484304358 1484304357 1484302559 9781484302552

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