International Investors' Portfolio Choice and Tax Reforms: The 2008 German Corporate Tax Reform Reconsidered

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The paper provides a comprehensive assessment of the growth and welfare effects of the 2008 German corporate tax reform, which entails a shift of the capital tax burden from the firm to the household level. Using a dynamic two-country computable general-equilibrium model with integrated capital markets, the results indicate a faint growth stimulus of the reform and a negative effect on domestic welfare. In fact, the reform increased the double taxation of equity-financed corporate investment, thereby impeding firms' investment. Further, the reform-induced tax incentives for foreigners to invest in German equity undermines the financing of the reform.
Original languageEnglish
Pages (from-to)376-413
Number of pages38
JournalFinanzarchiv : Public Finance Analysis
Issue number3
Publication statusPublished - 1 Sep 2018


  • corporate tax reform , dynamic computable general-equilibrium analysis , foreign firm ownership , portfolio investment

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