Corporate Tax Elasticities: A Reader’s Guide to Empirical Findings

Ruud A. de Mooij (Erasmus University Rotterdam, CPB, CESifo, Tinbergen Institute, Oxford University Centre for Business Taxation)
Sjef Ederveen (Ministry of Economic Affairs, the Netherlands)

Corporate taxes exert a variety of effects on business behaviour. A wealth of empirical evidence assesses the magnitude of these behavioural margins of taxation. This article offers an up-to-date review and aims to provide common ground by computing for each distortion the semi-elasticity of the corporate tax base. We pay particular attention to international investment where it is not a priory clear whether marginal investment decisions or discrete locations are most important. Using an extension of the meta analysis of De Mooij and Ederveen (2003), we explore the extent to which existing studies reveal differences in effect size between the intensive and extensive margins of international investment.

Download WP08/22 >