Report
What to expect from the reduction in tax on corporate earnings?
OECD countries are all conducting policies to reduce tax on corporate earnings. What should be expected from these policies? Comparing OECD countries, we examine whether there is a correlation between the level of tax on earnings and: The employment rate; The corporate investment rate; Income inequality. In theory, the tax rate on corporate earnings does not change employment or corporate investment choices, unless in the event of a liquidity constraint due to insufficient profitability. Across OECD countries, we find that a low tax rate on earnings or a low weight of tax on earnings is associated with: A higher employment rate, but to quite a small degree, Not a higher investment rate, Not higher income ineq uality. Altogether, the tax rate on earnings seems to have a rather small effect on the economy.
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Natixis
Based across the world’s leading financial centers, Natixis CIB Research offers an integrated view of the markets. The team provides support to inform Natixis clients’ investment and hedging decisions across all asset classes.
Patrick Artus
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