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Title:Taxes and the efficiency costs of capital distortions PDF Logo
Authors:Weichenrieder, Alfons J.
Klautke, Tina
Issue Date:2008
Series/Report no.:CESifo working paper 2431
Abstract:Tax neutrality towards alternative financing instruments for corporate investment is a ubiquitous demand in the political debate. At the same time, the literature is surprisingly silent about the magnitude of possible efficiency costs of a departure from tax neutrality. Against this background, the present paper discusses the theory of capital structure and provides backof-the-envelope calculations of the possible efficiency cost of a tax distortion of the debtequity decision.
Subjects:Debt-equity choice
capital structure
excess burden of taxation
JEL:H25
G32
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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