Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/18885
Authors: 
Panteghini, Paolo M.
Year of Publication: 
2004
Series/Report no.: 
CESifo Working Paper 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

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