The scientific literature provides evidence for an impact of company taxes on
investments. Practitioners, however, have a skeptical view on the meaning of this effect.
This paper builds the bridge between research and the interested practice by providing
detailed descriptives and clearly showing how the effects are derived. It analyzes the
development of German multinationals’ direct investments abroad and of foreign
multinationals’ investments in Germany from 1996 till 2008. A split along federal states is
applied. Starting from the analysis of the basic tax effect, the paper also covers current
research topics when analyzing the impact of existing loss carryforwards and when tracing
holding structures. The descriptive statistics already show that cross-border investments
have increased strongly. The development of Baden-Württemberg mainly corresponds to
that of Germany. The impact of taxation on investments is negative. A ten percentage
points higher corporate tax rate leads to about five percent lower investments, measured by
fixed assets. This effect is smaller for those companies which show loss carryforwards. A
lower tax rate at a specific location especially seems to attract holding companies, which
are applied for tax efficient group structuring.
Das Dokument wird vom Publikationsserver der Universitätsbibliothek Mannheim bereitgestellt.
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