Corporate Taxation and Investment.

The three essays contained in this dissertation consider the effect of U.S. federal tax policy on the investment behaviors of large, publicly traded firms. Chapter I considers the effect bonus depreciation on physical capital investment. Chapter II tests whether dividend and capital gains taxation impact mergers and acquisitions, a special form of corporation investment. Chapter III documents and analyzes the business investment response to the Domestic Production Activities Deduction. In sum, the essays find that, over the last decade, corporate taxation and changes in corporate tax policies have had large impacts on the investment decisions of US corporations.PhDEconomicsUniversity of Michigan, Horace H. Rackham School of Graduate Studieshttp://deepblue.lib.umich.edu/bitstream/2027.42/108777/1/ericohrn_1.pd

How Does Capital Investment Affect Workers? Evidence from Bonus Depreciation and Matched Employer-Employee Data

This project uses quasi-experimental variation in tax incentives for capital investment and recently-obtained access to confidential, matched employer-employee data from the Census Bureau to study how capital investments induced by these incentives affect firms\u27 choices to substitute capital for labor and firms\u27 employees. The policy we study, bonus depreciation, which allows firms to deduct investment costs from their taxes more quickly, disproportionately benefits firms that invest in longer-lived assets. By comparing workers in firms who are more affected by the policy to other workers, we will explore whether and to what extent capital investment benefits or harms workers, whether these effects are concentrated among low-income or low-skill workers, and whether incentives for capital accumulation affects inequality within firms and across skill levels