Profit Taxes and Financing Constraints
Journal
International Tax and Public Finance
ISSN
0927-5940
ISSN-Digital
1573-6970
Type
journal article
Date Issued
2012-08-17
Author(s)
Abstract
Without financing frictions, profit taxes reduce investment by their effect on the user cost of capital. With financing constraints, investment becomes sensitive to cash-flow. In this situation, even small taxes impose first order welfare losses, andACE and cash-flow tax systems are no longer neutral. When banks become active and provide monitoring services in addition to finance, an ACE tax yields larger investment and welfare than an equal yield cash-flow tax.
Language
English
Keywords
Financing constraints
cash-flow tax
ACE tax
HSG Classification
contribution to scientific community
HSG Profile Area
SEPS - Economic Policy
Refereed
Yes
Publisher
Springer
Publisher place
New York
Volume
20
Number
5
Start page
808
End page
826
Pages
19
Subject(s)
Eprints ID
215302
File(s)![Thumbnail Image]()
Name
TaxFinance2012July9.pdf
Size
270.43 KB
Format
Adobe PDF
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