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The Impact of Tax Reform on Corporate Capital Investment: Evidence from Australian Panel Data
Grant Richardson,
City University Hong Kong
Roman Lanis, University of Technology
ABSTRACT. We examine the impact of tax reform on corporate capital investment in Australia spanning the Ralph Review of Business Taxation reform. Based on panel data, our results indicate that corporate capital investment reduced because of the tax reform. The negative effects of the removal of accelerated depreciation exceeded the positive effects of the decrease in the corporate tax rate, hence corporate capital investment declined. Moreover, the decline was broad-based as it occurred across all major industry sectors. These findings remain robust to an alternate measure of corporate capital investment.
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