The role of personal income taxes in corporate investment decisions

Jahr: 2022

Typ: Journal Publication

Fachzeitschrift: Journal of Corporate Finance

Abstract

This paper examines the role of personal income taxes (PIT) in corporate investment decisions. Since PIT reduce consumption and increase cost of labor, investment decisions can be affected because of the inevitable link of production input factors. Using data on PIT in 27 European countries and three within-country approaches, we find that personal income taxes substantially reduce investment. The magnitude is comparable to the effect of corporate taxes. We also document that the PIT-investment relationship can be explained by increased labor costs and by reduced consumption due to higher PIT.

Veröffentlichungsinformationen

TRR 266 researchers

Martin Jacob IESE Business School

Volume Number

DOI

DOI Link

To cite this article

Jacob, M., & Vossebürger, R. (2022). The role of personal income taxes in corporate investment decisions. Journal of Corporate Finance, 77. https://doi.org/10.1016/j.jcorpfin.2022.102275

Zugehörige Projekte

B01

Investment Effects of Multidimensional Taxation

+ 5

Beteiligte Institutionen

Die Hauptstandorte vom TRR 266 sind die Universität Paderborn (Sprecherhochschule), die HU Berlin und die Universität Mannheim. Alle drei Standorte sind seit vielen Jahren Zentren für Rechnungswesen- und Steuerforschung. Hinzu kommen Wissenschaftler der LMU München, der Frankfurt School of Finance and Management, der Goethe-Universität Frankfurt, der Universität zu Köln und der Leibniz Universität Hannover, die die gleiche Forschungsagenda verfolgen.