ATJ Asian Tax Journal

Asian Tax Journal

Print ISSN 1738-3323 Online ISSN 2733-9270

Corporate Tax Reduction and Business Activity

  • Yu-Chan Kim Hongik University
  • Jin Soo Kim Korea Institute of Public Finance

Asian Tax Journal Vol. 5 No. 2 (2004), pp. 27-55

Abstract

This study focuses on the theoretical and empirical analyses through the model of marginal effective tax rate to try to answer whether the corporate income tax cut impacts on the activity of investment and business. In the theoretical and empirical analyses, the results did not support the hypothesis that the corporate income tax cut impacts on investment. In the empirical analysis, the result showed that temporary tax credit system for investment did not impact on investment, which isn't exactly same as the result of the comparative static analysis under the model of marginal effective tax rate. These results came from two factors. First, the scope of beneficiaries of temporary tax credit system for investment were changed several times and the system itself was abolished and reintroduced. Second, the system is ineffective because the scope of beneficiaries of temporary tax credit system for investment are limited, compared with those of investment in facilities.

Keywords

  • corporate income tax
  • marginal effective tax rate
  • activity of investment and business
  • temporary tax credit system for investment

Related Articles

ATJ
E-SubmissionSitemapContact Us RSS

Asian Tax Journal

Address : 3F, KICPA Bldg., 12 Chungjeongro 7-gil, Seodaemun-gu, Seoul 03736, Republic of Korea

Editor-in-Chief : Prof. Wanyong Kim Editorial Office : Dept. of Finance, Accounting & Taxation, Hanyang Cyber University, 220 Wangsimni-ro, Seongdong-gu, Seoul, Republic of Korea Tel : +82-2-2290-0418 / +82-10-8664-1117 E-mail : taxresearch2@hanmail.net