Report title: Lowering The Marginal Corporate Tax Rate: Why The Debate?
Author(s): Nikolay Anguelov, Ph.D
Report date: December 2015
Sponsor: Public Policy Center
Issue areas: Economic Development, Corporate Tax, Gross Domestic Product, Foreign Direct Investment, Multinational Corporation
Summary & key findings: This working paper challenges the assumption that lower corporate tax rates lead to an increase in foreign direct investment, and result in capital formation and GDP growth. Through the use of multiple regression analyses, this study demonstrates that multinational corporations avoid taxes through an incentive system of write-offs and loopholes. Findings from the analyses indicate that reduced corporate tax rates influence more foreign investment, but decrease annual gross domestic product. This implies that while tax competition may attract investment, it does not benefit the economy overall.
Prof. Anguelov was awarded the 2015 Amartya Sen Prize for his work on this paper.
Report link: Access the report here.