Our aim is to identify the impact of taxation on entrepreneurial decisions, especially the impact of taxes on risky investments, on the innovative ability of enterprises, and also on financing decisions.
Thus, our research is aiming at analyzing the follow-up-impact of individual tax regulations as well as of planned reform measures in taxation for entrepreneurs who are competing nationally and internationally. On the one hand we can derive recommendations from these results and on the other hand economic impacts of tax regulations are critically scrutinised at the same time.
Ongoing change of markets and framework conditions as well as global and geopolitical development require continual adjustments of enterprises, but also of politics. It is this perpetual process which makes our research current, relevant and exciting. In light of an increasingly complex tax system, which is intensified by international settlements and recommendations (e.g. EU, OECD), we can enhance entrepreneurial calculations and thus make an important contribution to tax reform discussions.
Our research is focused on quantitative-analytical as well as empirical analysis of existing tax regulations and of tax reforms. Thereby, our work is always solution-orientated. Whereas at the beginning of 2000 our research was mainly model-theoretically (capital market theory, real options price theory), which contributed to theory construction and development of economical preferable tax systems, our current research is – besides the continuation of this established research line – also dedicated to empirical validation of theoretically profound hypotheses by the help of archive and survey data as well as experimental testing.
Both aspects of our research, the contribution to theory development and hence the derivation of possible interactive effects as well as the validation of assumed coherences by the help of simulations and empirical testing, are equally important.
We were able to elaborate as well as crucially further develop concepts, which make it possible to include and to analyse economic uncertainty generally, but also tax uncertainty specifically, in decision-making. One question is, e.g., how these uncertainties affect the willingness to invest in risky (innovative) projects with regard to certain tax reform intentions. The correlations of uncertainties, which arise from the business models of an enterprise itself, and uncertainties from tax regulations or the taxation process have become more important for international operating enterprises in the recent past. This applies even more in view of the discussion and activities about the prevention of undesired profit shifting (Base Erosion and Profit Shifting, BEPS) in the course of the BEPS- action plan of the OECD. This discourse will probably unfold substantial (side-) effects for even those enterprises, which have not practiced aggressive tax planning. Especially industries whose business model is highly characterized by digitalization will experience severe (mostly blurred) changes of their tax burden. The arising effects for enterprises out of these changes are the focus of our research. E.g., in the context of a current research project we are surveying and evaluating the effects of rising complexity of tax regulations within an international context.
With a view to effects of other existing tax regulations, which are permanently debated on politico-economical dialogue, we are currently analysing the impacts of a capital gains taxation on investment decisions, a restriction of tax deductibility of borrowing costs on the capital structure of enterprises and a restriction of loss carryforward possibilities on the risk tolerance within an international context in particular. Furthermore, we analyse the effects of a common consolidated corporate tax base (CCCTB) for multinational corporate groups on their investment willingness and we examine the consequences of a reform of the inheritance and gift tax or the introduction of a wealth tax. Regarding our projects we are in constant dialogue with international researchers in our TAF- and CETAR workshops in Paderborn as well as on international conferences. Furthermore, we are cultivating a lively exchange with representatives of industry and practice, who are invited to the University of Paderborn on a regular basis, and commit ourselves to a very productive dialogue in different forums of the Schmalenbach-Gesellschaft (DBT, working groups). Many contemporary cooperative research projects arose from these longstanding contacts.
Our studies concerning tax burden, tax planning, and tax impact are both, scientifically and economically as well as politically important, because they can help to understand and to evaluate tax regulations and to apply them in a goal-orientated way. The obtained results can, furthermore, provide helpful suggestions in the political opinion-making and reform process.