So many states provide firms with an investment tax

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Many states provide firms with an investment tax credit that effectively reduces the price of capital. In theory these credits are designed to stimulate new investment and thus create jobs. Critics have argued that if there are strong factor substitution effects, these subsides can reduce employment in the state. Explain their argument

Reference no: EM1335429

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So many states provide firms with an investment tax : So many states provide firms with an investment tax credit that effectively reduces the price of capital.

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