An Analytical Model of Required Returns to Equity under Taxation with Imperfect Loss Offset

Lund, Daryl

doi:10.2139/ssrn.498543

Cited by 2 publications

(2 citation statements)

References 32 publications

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“…Lund (2005). Intuitively, a deduction is close to risk free when the net tax base is much larger, depending also on correlations.…”

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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“…Lund (2005). Intuitively, a deduction is close to risk free when the net tax base is much larger, depending also on correlations.…”

Section: Risk Attitudes and Discount Ratesmentioning

confidence: 99%

Rent Taxation for Nonrenewable Resources

Lund

2009

SSRN Journal

Self Cite

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show abstract

“…Systematic risk (and thus the correct discount rate) of the net after-tax cash flow depends on the tax system. Lund (2002c) gives analytical solutions for stylized linear tax systems, while Lund (2005) extends the analytical solutions to nonlinear cases with imperfect loss offset. When taxes are nonlinear in many periods, numerical methods are needed, and risk-adjusted discount rates are no longer practical tools.…”

Section: Risk Attitudes and Discount Ratesmentioning

confidence: 99%