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ifo Institut – Leibniz-Institut für Wirtschaftsforschung an der Universität München >
CESifo Working Papers, CESifo Group Munich >
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http://hdl.handle.net/10419/30547
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| Title: | | The role of the corporate income tax as an automatic stabilizer  |
| Authors: | | Buettner, Thiess Fuest, Clemens |
| Issue Date: | | 2009 |
| Series/Report no.: | | CESifo working paper 2798 |
| Abstract: | | This paper analyses the effectiveness of the corporate income tax as an automatic stabilizer. It employs a unique firm-level dataset of German manufacturers combining financial statements with firm-specific information about credit market restrictions. The results show that approximately 20 per cent of all firms report both positive taxable income and capital market restrictions. Taking account of the income tax rates and the size differences of the firms, we find that demand stabilization through the corporate income tax amounts to about 8 per cent of an initial shock to gross revenues. This stabilization effect varies over the business cycle and tends to increase during cyclical downturns. |
| Subjects: | | corporate income tax stabilization capital market restrictions loss offset firm-level data |
| JEL: | | H25 H32 E63 |
| Document Type: | | Working Paper |
| Appears in Collections: | | CESifo Working Papers, CESifo Group Munich
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