Replication data for: The Impact of Investment Incentives: Evidence from UK Corporation Tax Returns

Principal Investigator(s): View help for Principal Investigator(s) Giorgia Maffini; Jing Xing; Michael P. Devereux

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Project Citation:

Project Description

Summary: Using UK corporation tax returns, we provide evidence on the effects of accelerated depreciation allowances on investment, exploiting exogenous changes in the qualifying thresholds for first-year depreciation allowances (FYAs) in 2004. The investment rate of qualifying companies increased by 2.1–2.5 percentage points relative to those that did not qualify. We exploit variation in the timing of tax payments to show that this effect is primarily due to the change in the cost of capital, rather than a relaxation of financial constraints. Discontinuity at notches in the cost of capital at the qualifying thresholds does not affect our results.

Scope of Project

JEL Classification:
      D25 Intertemporal Firm Choice: Investment, Capacity, and Financing
      G31 Capital Budgeting; Fixed Investment and Inventory Studies; Capacity
      H25 Business Taxes and Subsidies including sales and value-added (VAT)
      H32 Fiscal Policies and Behavior of Economic Agents: Firm

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Published Versions

V1 [2019-12-03]

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