The Macroeconomic Effects of Corporate Tax Reforms
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arXiv
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| Format: | Preprint |
| Veröffentlicht: |
2021
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| _version_ | 1866910017921220608 |
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| author | Furno, Francesco |
| author_facet | Furno, Francesco |
| contents | Using aggregate, sectoral, and firm-level data, this paper examines the effects of two major U.S. corporate tax cuts. The Tax Cuts and Jobs Act (TCJA-17) led to large shareholder payouts but modest aggregate stimulus, while Kennedy's 1960s tax cuts stimulated output and investment with minimal payout impact. To explain this divergence, I incorporate tax depreciation policy and a pass-through business sector into a neoclassical growth model. The model suggests that accelerated depreciation and a large pass-through share dampen stimulus from corporate tax rate reductions, and that Kennedy's cuts boosted output four times more per dollar of lost revenue than the TCJA-17. |
| format | Preprint |
| id |
arxiv_https___arxiv_org_abs_2111_12799 |
| institution | arXiv |
| publishDate | 2021 |
| record_format | arxiv |
| spellingShingle | The Macroeconomic Effects of Corporate Tax Reforms Furno, Francesco General Economics Economics Using aggregate, sectoral, and firm-level data, this paper examines the effects of two major U.S. corporate tax cuts. The Tax Cuts and Jobs Act (TCJA-17) led to large shareholder payouts but modest aggregate stimulus, while Kennedy's 1960s tax cuts stimulated output and investment with minimal payout impact. To explain this divergence, I incorporate tax depreciation policy and a pass-through business sector into a neoclassical growth model. The model suggests that accelerated depreciation and a large pass-through share dampen stimulus from corporate tax rate reductions, and that Kennedy's cuts boosted output four times more per dollar of lost revenue than the TCJA-17. |
| title | The Macroeconomic Effects of Corporate Tax Reforms |
| topic | General Economics Economics |
| url | https://arxiv.org/abs/2111.12799 |