Death and Taxes: Does Taxation Matter for Firm Survival?
IMF Working Papers, April 19, 2019
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- Death and Taxes: Does Taxation Matter for Firm Survival?
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Bibliographic details
- Authors: Serhan Cevik, Fedor Miryugin
- Published: April 19, 2019
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781498305433.001
Objective and data
- Investigates the impact of taxation on firm survival using hazard models.
- Uses a large-scale panel dataset on over 4 million nonfinancial firms from 21 countries over the period 1995–2015.
- Authors: Serhan Cevik, Fedor Miryugin.
- Publication date: April 19, 2019.
Key empirical findings
- A lower level of effective marginal tax rate improves firms’ survival chances.
- The result is both statistically and economically important.
- The result remains robust when the sample is partitioned into country subgroups.
- The effect of taxation on firms’ survival probability exhibits a non-linear pattern.
- The effect is stronger in developing countries than advanced economies.
Methodology highlights
- Empirical approach: hazard models applied to the panel of firms.
- Focus: nonfinancial firms and their survival prospects in relation to taxation measures, including the marginal effective tax rate.
Policy implications and recommendations
- Findings imply important considerations for the design of corporate tax systems.
- The challenge is not simply reducing the statutory tax rate.
- Policy priority: level the playing field for all firms by rationalizing differentiated tax treatments across sectors, asset types and sources of financing.
Subject and keywords (as presented)
- Subjects: Capital productivity, Corporate income tax, Marginal effective tax rate, Production, Tax incidence, Tax policy, Taxes, Total factor productivity.
- Keywords: appendix table, Capital productivity, Corporate income tax, Europe, firm, firm survival, Marginal effective tax rate, nonfinancial firm, summary statistics, survival prospects, Tax incidence, Total factor productivity, WP.
Source: Serhan Cevik and Fedor Miryugin, "Death and Taxes: Does Taxation Matter for Firm Survival?", IMF Working Papers, April 19, 2019.
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