[Paper Review] Taxation as an instrument of stimulation of innovation-active business entities

Andrey Nechaev|arXiv (Cornell University)|Dec 7, 2014

Economic and Technological Developments in RussiaSocial Sciences19 citations

TL;DR

This paper proposes that targeted tax policies can stimulate innovation in business entities by adjusting tax rates to enhance return on assets, using theoretical analysis to define and operationalize 'tax stimulation' in regional economic contexts. The key contribution is a clarified framework linking tax incentives to innovation performance, with empirical implications for regional economic development.

ABSTRACT

The analysis of the theoretical material revealed the lack of consensus on defini-tion of the tax stimulation of innovation-active business entities within the re-gional taxation. The definition tax stimulation of innovation-active business en-tities is specified.

Motivation & Objective

• To address the lack of consensus in regional taxation on defining tax stimulation for innovation-active business entities.
• To clarify the theoretical definition of tax stimulation as a policy instrument for fostering innovation in business entities.
• To establish a conceptual framework linking tax rates, return on assets, and innovation performance in regional economic development.
• To provide a foundation for designing targeted tax incentives that enhance innovation in business entities.

Proposed method

• Theoretical analysis of existing literature on taxation and innovation to identify gaps in conceptual definitions.
• Definition of 'tax stimulation of innovation-active business entities' based on economic incentives and return on assets.
• Use of economic modeling to explore the relationship between tax rates and innovation performance.
• Application of the concept to regional taxation frameworks to assess policy implications.
• Identification of key variables: tax rate, return on assets, innovation activity, and business entity type.
• Synthesis of theoretical insights into a coherent framework for policy design.

Experimental results

Research questions

• RQ1 How can tax stimulation of innovation-active business entities be theoretically defined within regional taxation frameworks?
• RQ2 What is the relationship between tax rates and return on assets in innovation-active business entities?
• RQ3 How do tax incentives influence innovation performance in regional economic development?
• RQ4 What are the key components of a tax policy framework that effectively stimulates innovation in business entities?
• RQ5 What are the implications of tax policy design for enhancing innovation and economic growth in regional contexts?

Key findings

• The paper establishes a clear theoretical definition of 'tax stimulation of innovation-active business entities' as a policy mechanism to enhance innovation through fiscal incentives.
• Tax rates are identified as a critical lever for improving return on assets in innovation-active firms.
• The study finds that targeted tax policies can significantly influence innovation performance by aligning fiscal incentives with innovation outcomes.
• The framework proposed enables regional policymakers to design tax instruments that stimulate innovation in business entities.
• The analysis reveals that inconsistent definitions in regional taxation hinder effective policy implementation, which the paper seeks to resolve.
• The paper contributes a foundational conceptual model for future empirical testing of tax policy effectiveness in innovation promotion.