A general proposition on the design of a neutral business tax

Boadway, Robin; Bruce, Neil

doi:10.1016/0047-2727(84)90026-4

Cited by 238 publications

(172 citation statements)

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“…6 Haufler and Schjelderup (2000) explicitly consider a cash-flow tax which is equivalent to an ACE system in their setting.…”

Section: Literature Reviewmentioning

confidence: 99%

“…3 1 See, for instance, King (1974), Auerbach (1979), Bradford (1981), Sinn (1991a) and, for a review of the literature, Auerbach (2002) and Auerbach et al (2010). 2 The ACE was first proposed by the Institute of Fiscal Studies (IFS, 1991, and Devereux and Feeman, 1991) and is related to the work by Boadway and Bruce (1984). A refined treatment can be found in, for example, Bond and Devereux (1995).…”

Section: Introductionmentioning

confidence: 99%

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Corporate deductibility provisions and managerial incentives

Koethenbuerger¹,

Stimmelmayr²

2014

Journal of Public Economics

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Using an agency model of firm behavior, the paper analyzes whether the cost of investment should be tax exempt. The findings suggest that, when managers engage in wasteful capital expenditures, welfare may decline if the cost of investment is tax deductible, as commonly advocated. The extent to which the return on investment should be taxed depends on how the internal provision of incentive pay and external monitoring by banks interact in constraining the manager and whether retained earnings or new share issues finance investments at the margin. The results are informative for the design of investment subsidies which might be integrated in corporate tax systems such as an Allowance for Corporate Equity or a cash-flow tax. Terms of use: Documents in EconStor mayJEL-Code: H250, D210.

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“…6 Haufler and Schjelderup (2000) explicitly consider a cash-flow tax which is equivalent to an ACE system in their setting.…”

Section: Literature Reviewmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Corporate deductibility provisions and managerial incentives

Koethenbuerger¹,

Stimmelmayr²

2014

Journal of Public Economics

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“…It intends to give a deduction equal in present value to the investment itself, typically exceeding most CIT systems' depreciation allowances. A generalization of the idea is found in Boadway & Bruce (1984). Investment, indeed any yearly negative net cash flow, is carried forward for later deduction, with interest accumulation, as soon as revenues allow.…”

Section: Comparing Tax Systems Suggesting Tax Reformsmentioning

confidence: 99%

“…It is possible to maintain the neutrality if some cash flows (e.g., tax value of deductions) are postponed in time, provided that interest accumulates so as to leave companies indifferent to the postponement. The result is generalized by Bond & Devereux (1995), building on Boadway & Bruce (1984).…”

Section: Risk Attitudes and Discount Ratesmentioning

confidence: 99%

Rent Taxation for Nonrenewable Resources

Lund

2009

SSRN Journal

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents inThe literature on taxation of rents from nonrenewable resources uses different theoretical assumptions and methods and a variety of empirical observations to arrive at widely diverging conclusions. Many studies use models and methods which disregard uncertainty, investigating distortionary effects of different taxes on whether, when, and how to explore for, develop and operate resource deposits. Introducing uncertainty into the analysis opens a range of challenges, and leads to results which cast doubt upon the relevance of studies which neglect uncertainty. There are, however, several ways to analyze uncertainty, regarding companies' behavior, resource price processes, and diversification opportunities, all with different implications for taxation. Methods developed in financial economics since the 1980's are promising, but still not in widespread use. Some more specific topics covered in this review are optimal risk sharing between companies and governments, time consistency and fiscal stability, the relationship between taxes and discount rates, and transfer pricing. JEL classification numbers: B20, H20, H25, L71, O13, Q38

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“…One attractive feature of the ACE -originally pointed out by Boadway and Bruce (1984) -is that it offsets the investment distortions caused by deviations between true economic 22 Nevertheless, the Estonian experience with a tax on distributed corporate profits suggests that a cash flow business tax may indeed be viable in practice. If the Estonian distribution tax were modified to allow a deduction for the revenue from new share issues, it would be equivalent to a so-called S-based cash flow tax in the terminology of the Meade Committee (1978).…”

Section: Taxing Rents: An Allowance For Corporate Equity?mentioning

confidence: 99%