EconStor >
ifo Institut – Leibniz-Institut für Wirtschaftsforschung an der Universität München >
CESifo Working Papers, CESifo Group Munich >

Please use this identifier to cite or link to this item:

http://hdl.handle.net/10419/18885
  
Title:Wide vs. narrow tax bases under optimal investment timing PDF Logo
Authors:Panteghini, Paolo M.
Issue Date:2004
Series/Report no.:CESifo working papers 1246
Abstract:This article compares an ACE system with a CBIT system in an open economy. Using a realoption approach we show that, if a firm can decide when to invest, a tradeoff is found. According to traditional wisdom, a high-income firm investing in an ACE system faces a heavier tax burden at each instant. On the other hand, it finds it optimal to invest earlier, thereby enjoying a longer stream of income. If, given the same tax burden, the latter effect is great enough, the firm will prefer the ACE system. In this article we also run a simulation which shows that preference for an ACE system is a realistic result.
Subjects:corporate taxation
open economy
timing and real options
JEL:H32
H25
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

Files in This Item:
File Description SizeFormat
cesifo1_wp1246.pdf303.75 kBAdobe PDF
No. of Downloads: Counter Stats
Download bibliographical data as: BibTeX
Share on:http://hdl.handle.net/10419/18885

Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.