Is Innovation an response to Tax Incentives ? - evidence from the german R&D Tax Credit

• In Event: Taxation and Innovation

Abstract

We exploit a 2020 German R&D Policy that decreased the user cost of capital by allowing in the first time of german history a tax incentive for R&D. To overcome the lack of exogenous variation in exposure to the policy. We estimate a Poisson maximum likelihood design on the universe of R&D tax credit filings in Germany combined with other datasets. We find a positive and significant impact of tax credits for R&D on innovation efficiency of young and financial constraint firms. Implying an increase by 7 mio. euros in innovation efficiency. This magnitude implies that around 7 mio. euro less is spent to file a patent. When changing our specification in a treatment and control setting, we find that filed patents decrease by 2,81 patents post-policy. We account, that this result could be driven by higher bureaucratic costs for firms.

Authors

• Samuel Maeurer, University of Mannheim

• Johannes Voget, University of Mannheim, Germany