The impact of investment incentives: Evidence from UK corporation tax returns
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...
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| Format: | Journal article |
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American Economic Association
2019
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| _version_ | 1797086614383493120 |
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| author | Maffini, G Devereux, M Xing, J |
| author_facet | Maffini, G Devereux, M Xing, J |
| author_sort | Maffini, G |
| collection | OXFORD |
| description | 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. |
| first_indexed | 2024-03-07T02:24:24Z |
| format | Journal article |
| id | oxford-uuid:a5189a47-e25d-464c-b110-5ddaafef5cb4 |
| institution | University of Oxford |
| last_indexed | 2024-03-07T02:24:24Z |
| publishDate | 2019 |
| publisher | American Economic Association |
| record_format | dspace |
| spelling | oxford-uuid:a5189a47-e25d-464c-b110-5ddaafef5cb42022-03-27T02:38:05ZThe impact of investment incentives: Evidence from UK corporation tax returnsJournal articlehttp://purl.org/coar/resource_type/c_dcae04bcuuid:a5189a47-e25d-464c-b110-5ddaafef5cb4Symplectic Elements at OxfordAmerican Economic Association2019Maffini, GDevereux, MXing, JUsing 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. |
| spellingShingle | Maffini, G Devereux, M Xing, J The impact of investment incentives: Evidence from UK corporation tax returns |
| title | The impact of investment incentives: Evidence from UK corporation tax returns |
| title_full | The impact of investment incentives: Evidence from UK corporation tax returns |
| title_fullStr | The impact of investment incentives: Evidence from UK corporation tax returns |
| title_full_unstemmed | The impact of investment incentives: Evidence from UK corporation tax returns |
| title_short | The impact of investment incentives: Evidence from UK corporation tax returns |
| title_sort | impact of investment incentives evidence from uk corporation tax returns |
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