Incentive Effects Of Tax Preferences On R&D Innovation

The high risk and positive externality of technological innovations dictate that companies,as the main facilitators of innovation,need the support of government policies.In recent years,the Chinese government has issued more policies with greater tax preferences to encourage companies to increase R&D input.Most extant studies focus more on tax preferences as a whole,lacking specific analysis of various preferential tax policies.This paper divides the preferential tax policies that can motivate firms to carry out R&D innovation into three types:preferential tax rate,super deduction,accelerated depreciation and amortization.Using a unique,carefully handpicked and processed dataset sorted out based on financials of A-share listed companies for the period from 2014 to 2020,the preferential tax rates,super deductions,and amounts of accelerated depreciation and amortization actually enjoyed by the listed companies are obtained.Based on above data,this paper tests whether each type of tax preferences can motivate companies to increase their R&D input and innovation output,and analyzes the relationship among the three types of tax preferences,whether they are complementary or substitutive to each other.This paper also compares the incentive effects on High and New Technology Enterprises(HNTEs)to those on non-HNTEs,as well as the incentive effects on companies at the growth stage versus those at the maturity stage.The empirical results show that preferential tax rate,super deduction,and accelerated depreciation and amortization can respectively motivate companies to increase R&D input and can significantly increase innovation output.The magnitude of the incentive effects towards R&D input ranks as:super deduction>accelerated depreciation and amortization>preferential tax rate.The magnitude of the incentive effects towards innovation output ranks as:preferential tax rate>super deduction>accelerated depreciation and amortization.In general,there exists substitution effect on the incentive effects among the three types of tax preferences,namely "1+1<2".All the three types of tax preferences have positive incentive effects towards the R&D input and innovation output of HNTEs and non-HNTEs,but the magnitude of those effects varies.All the tiree types of tax preferences have positive incentive effects towards the R&D input and innovation output of companies at the growth stage and those at the maturity stage,but the magnitude of those effects varies,with the effects on companies at the growth stage being greater.In addition,R&D input plays a partial mediation role in the mechanism of innovation output affected by all three types of tax preferences.Finally,based on the empirical test results,this paper puts forward policy suggestions on the above three types of tax incentives.Different from previous studies based on comprehensive tax preferences,this study innovatively divides the tax preferences into three specific categories according to their economic substance and respectively test their impacts on corporate R&D input and innovation output,so that the empirical evidence based on the correct actual data and its economic substance.This paper also finds a new way to measure tax rate preference,while collects and collates the amount of tax rate preference,additional deduction,and accelerated depreciation and amortization actually enjoyed by enterprises by hand,so the research conclusion is more reliable.