Template-Type: ReDIF-Article 1.0
Author-Name: Samvel S. Lazaryan
Author-Email: lazaryan@nifi.ru
Author-Workplace-Name: Financial Research Institute, Moscow 127006, Russia
Author-Name: Mariya A. Chernotalova
Author-Email: mchernotalova@nifi.ru
Author-Workplace-Name: Financial Research Institute, Moscow 127006, Russia
Title: Taxes Impact on Private Investment
Abstract: The article analyzes methods of empirical estimation of tax changes impact on private investment and possible difficulties of such empirical evaluation. The authors also review results of empirical studies dedicated to impact of taxes on firms’ investment. In addition, the authors consider several aspects of impact of already conducted or only potential tax changes on private investment in Russia. There are two ways how tax changes influence investment of companies: the first one — they change benefits and costs of investment decision; the second one — they influence cash flows of the company, effectively changing feasibility of investment. Estimating general effect of a certain tax change calls for using a general equilibrium model, but most studies focus on partial equilibrium effects. The main problem of empirical analysis of impact of taxes on investment is endogeneity of the tax system. If one addresses this and other issues properly, he is likely to conclude that providing investment tax
credits, allowing accelerated depreciation, lowering profit tax rate, introducing positive difference between tax rate on distributed and undistributed profits and reducing overall tax burden positively affect investment of companies.
Classification-JEL: H32, E62
Keywords: tax policy, investment of firms, investment tax credit, depreciation, profit tax
Journal: Finansovyj žhurnal — Financial Journal
Pages: 71-84
Issue: 3
Year: 2017
Month: June
File-URL: http://www.nifi.ru/images/FILES/Journal/Archive/2017/3/articles/fm_2017_3_06.pdf
File-Format: Application/pdf
Handle: RePEc:fru:finjrn:170306:p:71-84