Abstract Business corporate executives were surveyed to obtain their perceptions of the importance of certain investment tax incentives in deciding to acquire new equipment. The responses were analyzed to determine if the viewed importance of tax incentives by business decision makers varies depending on the unused output capacity of their firms. The findings suggest that the effectiveness of investment tax incentives may be lowest during a period of economic recession. Also, business investment activity may be stimulated by a tax policy which generates additional demand for products and services, rather than one which offers investment tax incentives.
Rose et al. (Sun,) studied this question.
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