Effects of Taxation on Company Decisions

Project direction: Prof. Dr. Andreas Oestreicher; Prof. Dr. Christoph Spengel, University of Mannheim

Associated Researcher: Prof. Dr. Reinald Koch, Universität Eichstätt-Ingolstadt; Prof. Dr. Jost Henrich Heckemeyer, University of Kiel

Team: Prof. Dr. Andreas Oestreicher, Prof. Dr. Reinald Koch, Prof. Dr. Jost Henrich Heckemeyer, Dr. Sebastian Bause, Dr. Markus Gamm, Universität Eichstätt-Ingolstadt, Dr. Stefan Hohls, Lisa Hillmann, Rebecca Höhl

Goal:
The objective of this research project was to quantify the behavioural reactions of companies to tax reforms affecting central areas of decision making (investment decisions, finance decisions, and profit allocation decisions). The extent of these reactions was investigated on the basis of elasticities by means of econometric analyses and, for purposes of supporting political decisions, dynamic microsimulation of tax revenues. To this end, we determined simulated marginal tax rates taking into account not only the nominal tax rate, but also relevant elements of the tax base, loss compensation provisions, and domestic group taxation regimes. A further goal was to show to what extent simulated marginal tax rates supply enhanced econometric evidence of the tax impact on company decisions.