Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/82929
Authors: 
Alvarez JR, Luis
Kanniainen, Vesa
Södersten, Jan
Year of Publication: 
2000
Series/Report no.: 
Working Paper, Department of Economics, Uppsala University 2000:4
Abstract: 
The paper shows that a corporate tax policy which is thought to be neutral may have significant incentive effects. This result is established in a model with tax advantage to debt and expectations about a forthcoming tax reform. Investment spurt effects are established and compared to those of a firm with equity finance. A tax-cut cum base-broadening tax reform which leaves the long-run investment incentives of an all-equity firm unaffected is shown to cause a substantial short run investment hike. The findings are illustrated by numerical simulations indicating the magnitudes of the spurt effects.
Subjects: 
Tax neutrality
Tax reform
Investment spurts
Debt finance
JEL: 
H25
H32
Document Type: 
Working Paper

Files in This Item:
File
Size





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