Taxation and Incorporation
Type
discussion paper
Date Issued
2011-07-15
Author(s)
Abstract
This paper provides a theory of incorporation and taxation that emphasizes
the role of the corporate legal form in facilitating access to external capital
and the potential advantages of limited liability. Incorporation relaxes financing
constraints and makes corporations larger than comparable non-corporate
firms. For the same reason, a tax on corporations imposes a smaller first-order
welfare loss than a tax on non-corporate firms. We study the consequences of
tax reform and compare the role of taxation with other institutional reforms.
the role of the corporate legal form in facilitating access to external capital
and the potential advantages of limited liability. Incorporation relaxes financing
constraints and makes corporations larger than comparable non-corporate
firms. For the same reason, a tax on corporations imposes a smaller first-order
welfare loss than a tax on non-corporate firms. We study the consequences of
tax reform and compare the role of taxation with other institutional reforms.
Language
English
Keywords
Incorporation
corporate tax
external capital
limited liability.
HSG Classification
contribution to scientific community
Refereed
No
Start page
1
End page
29
Pages
29
Subject(s)
Eprints ID
68553
File(s)![Thumbnail Image]()
Name
IncorpTax2011July15.pdf
Size
330.95 KB
Format
Adobe PDF
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