Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/130604 
Year of Publication: 
2016
Series/Report no.: 
DIW Roundup: Politik im Fokus No. 93
Publisher: 
Deutsches Institut für Wirtschaftsforschung (DIW), Berlin
Abstract: 
A key challenge for economic policy today is to make the financial system more resilient. The literature finds that high indebtedness (or: leverage), both in the financial and in the real sectors, is a danger to macroeconomic stability and growth. Moreover, the design of the corporate tax system is an important determinant of leverage: in many countries interest paid on debt is tax-deductible while the return on equity is not, such that tax systems incentivize debt-type financing and, hence, leveraging. This article summarizes the debate about the implications of corporate taxation for leverage and economic stability. Proposals for addressing the debt bias of taxation are also presented.
Document Type: 
Research Report

Files in This Item:
File
Size
374.27 kB





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