No description available.

Class of 2013 Abstract / Specific Aims: To assess the association between marginal tax rates (MTR) and innovative output of biotechnology firms. The MTR plays an important role in firms’ financing choices. Assessment of a firm’s tax status may reveal how firms decide on investment policies that affect R&D. Methods: A retrospective database analysis was used. Subjects included were firms within the biotechnology sector with the Standard Industrial Classification code of 2836 from 1980 - 2011. MTR Data was obtained from the S&P Compustat database, and Patent data was obtained from the U.S. Patent and Trademark Office. Changes in MTR’s on outcomes of patents were analyzed by performing an inferential analysis. Generalized estimating equations (GEE) were used, specifically utilizing a GEE regression with a negative binomial distributional family with log link, independent correlation structure and robust standard error variance calculation. Patents were regressed by the lagged change in MTR, after interest deductions. Main Results: The lag years 2 and 5 of the MTR change were statistically significant, (p = 0.031) and (p = 0.026) for each model respectively. Every one unit increase in the change of the MTRs was associated with large and significant drops in patents 78.8% (IRR = 0.212), 90.7% (IRR = 0.093), 92.7% (IRR = 0.073) at year 2 lag and 84.8% (IRR = 0.152), 92.6% (IRR = 0.074) at year 5 lag. Conclusion: An increase in the change of the MTR results in significant drops in patenting activity.

This thesis consists of three essays that explore incentives and disincentives in the U.S. social safety net. In the first essay, my coauthors and I measure the size and impact of U.S. marriage taxation. Our marriage tax measure incorporates all major federal and state taxes and transfer programs. The measure is calculated as the expected percentage loss in lifetime spending from marriage, controlling for partner choice. We find an average marriage tax of 2.69 percent that is substantially higher for low-income individuals. Exploiting state-level variation, we find that the marriage taxes strongly disincentivize marriage. Among females with children, a one percentage point increase in the marriage tax rate decreases the probability of marrying by 3.69 percentage points. The second essay evaluates the effects of free pre-kindergarten (Pre-K) programs on maternal labor force participation (LFP). Pre-K rules vary across U.S. states, and most states have income eligibility requirements. To estimate the causal effects of access to Pre-K on labor supply, we examine the change in the LFP of mothers whose child becomes age-eligible for Pre-K controlling for individual factors. We find that access to Pre-K increases overall maternal LFP by 2.3 percentage points. However, the effect is significant only for mothers with certain demographic characteristics. Our results are robust across a series of placebo tests and alternative specifications and sample restrictions. In the third essay I estimate how the Affordable Care Act (ACA) changed the returns to work and affected labor supply decisions. First, I identify three natural experiments where the ACA changed work incentives. I find that depending on the experiment and affected population, the ACA changed weekly hours worked by between -3 and +2. Next, I use an exogenous shock to effective marginal tax rates (EMTRs) introduced by the ACA as an instrument to estimate the overall labor supply elasticity. I find it to be 0.1. Using this elasticity, I estimate the aggregate effect of the ACA on work effort. I find that, in the aggregate, the ACA did not affect US labor supply. However, for some groups the effect was economically and statistically significant.

Although much research on corporate dividend policy exists, the evidence is far from conclusive. Understanding how dividend taxes affect firm-level decisions is crucial to evaluating dividend imputation credits which provide shareholder-level tax credits for dividends received or decreased shareholder-level dividend tax rates, which reduce the double taxation of dividends. Using changes in New Zealand and Australia’s tax regimes, this dissertation provides new evidence on the relationship between tax incentives for R&D investment and dividend payment. The results show that the theory that the tension between R&D investment and dividend payment decreases when a country previously not offering tax incentives for R&D investment or dividend payout, implements one, does not hold using New Zealand firms. Further, New Zealand dividend-paying firms with higher marginal tax rates behave in the manner predicted for firms moving from a tax regime offering a tax incentive for R&D investment to a tax regime offering tax incentives for both R&D investment and dividend payment. The results using Australian data, demonstrate that that the tension between R&D investment and dividend payment increases when a country previously offering only a tax incentives for R&D investment, offers one for both R&D investment and dividend payment. This result is driven by firms with high marginal tax rates. These findings demonstrate that the relationship between tax incentives for R&D investment and dividend payment varies according to firm marginal tax rates and typical dividend payment policies. It also reiterates the importance of considering firms’ abilities to use R&D tax incentives, via their marginal tax rates, when contemplating the effects a shareholder-level dividend tax decrease will have on R&D investment. This dissertation also provides new insight into the corporate dividend policy views. The results support the double taxation and tax irrelevance views in dividend-paying firms operating in a tax regime with dividend imputation and capital gains taxes. By documenting a significant decrease in R&D investment after a change in dividend taxes, this dissertation also highlights a void in the current corporate dividend policy views and shows the need for the inclusion of R&D investment.