The Effect of Corporate Taxation on Total Factor Productivity Growth Rates in the U.S. Manufacturing Sector
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2020
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Haverford College. Department of Economics
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eng
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Open Access
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Abstract
Corporate taxation is a powerful tool used by the United States government and a material portion of overall tax revenue. The goal of this paper is to understand how these taxes affect productivity growth rates in the United States manufacturing sector. Income statement and balance sheet data from the US Census Bureau, and productivity data from the Bureau of Labor Statistics was collected on 17 manufacturing sub-industries between 2006 and 2017. A multiple OLS regression model was used, yielding statistically significant evidence supporting the hypothesis that corporate tax rate increases decrease productivity growth rates. The findings and nuances of this study can be used by policymakers when determining the corporate tax rate, maximizing tax revenue while being sensitive to the operating conditions their actions create.