Tax Credits and Small Firm R&amp;D Spending

Ajay Agrawal; Carlos Rosell; Timothy Simcoe

doi:10.1257/pol.20140467

journal article May 01, 2020

Tax Credits and Small Firm R&D Spending

Ajay Agrawal Carlos Rosell Timothy Simcoe

American Economic Journal: Economic Policy Vol. 12 No. 2 pp. 1-21 · American Economic Association

View at Publisher Save 10.1257/pol.20140467

Abstract

In 2004, Canada changed the eligibility rules for its Scientific Research and Experimental Development (SRED) tax credit, which provides tax incentives for R&D conducted by small private firms. Difference-in-difference estimates show a 17 percent increase in total R&D among eligible firms. The impact was larger for firms that took the tax credits as refunds because they had no current tax liability. Contract R&D expenditures were more elastic than the R&D wage bill. The response was also greater for firms that invested in R&D capital before the policy change. (JEL D22, G32, H25, L25, O32, O38)

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Metrics

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Citations

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References

Details

Published: May 01, 2020
Vol/Issue: 12(2)
Pages: 1-21

Authors

A

Ajay Agrawal

University of Toronto, 105 St. George Street, Toronto, ON M5S 3E6, Canada and NBER (email: )

C

Carlos Rosell

Department of Finance, 90 Elgin Street, Ottawa, ON K1P0C6, Canada (email: )

T

Timothy Simcoe

Boston University Questrom School of Business, 595 Commonwealth Avenue, Boston, MA 02215 and NBER (email: )

Cite This Article

Ajay Agrawal, Carlos Rosell, Timothy Simcoe (2020). Tax Credits and Small Firm R&D Spending. American Economic Journal: Economic Policy, 12(2), 1-21. https://doi.org/10.1257/pol.20140467

Tax Credits and Small Firm R&amp;D Spending

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