Monday, 29 October 2018

Taxation and innovation in the 20th century

a column by Ufuk Akcigit, John Grigsby, Tom Nicholas and Stefanie Stantcheva for VOX: CEPR’s Policy Portal

Understanding how taxation influences innovation is of central importance to create investment incentives for R&D, yet our knowledge remains limited due to a lack of data, especially covering a long period of time.

This column uses newly constructed datasets from the 20th century to examine the effects of both personal and corporate income taxation on inventors, as well as on firms that do R&D. It finds consistently negative effects of high taxes on innovation over time as well as on individual inventors and firms.

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