Asymmetric Taxation under Incremental and Sequential Investment

Panteghini, Paolo M.

doi:10.1111/j.1467-9779.2005.00243.x

Cited by 32 publications

(23 citation statements)

References 29 publications

Supporting

Mentioning

Contrasting

Unclassified

Order By: Relevance

“…11 For a discussion on the e¤ects of no loss-o¤set, see e.g. Panteghini (2001Panteghini ( , 2005. 12 This rule, which only requires the knowledge of book values, is in line with the ACE tax proposal.…”

Section: The Tax Systemmentioning

confidence: 97%

S-based taxation under default risk

Panteghini

2006

Journal of Public Economics

Self Cite

View full text Add to dashboard Cite

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 in EconStor may S-BASED TAXATION UNDER DEFAULT RISK AbstractThis article studies the characteristics of a S-based tax system under default risk. In particular we show that its neutrality properties depend on whether debt is protected or unprotected. In the former case, this system is neutral. In the latter case, where default timing is optimally chosen by shareholders, the S-based system is neutral with respect to real decisions only if the firm's and the lender's tax rate are equal. However, the shareholders' decision to default is always distorted.JEL Code: H25, H32.

show abstract

Section: The Tax Systemmentioning

confidence: 97%

S-based taxation under default risk

Panteghini

2006

Journal of Public Economics

Self Cite

View full text Add to dashboard Cite

show abstract

“…By applying a real options approach, Niemann (1999) shows that there is a neutral depreciation schedule depending on the respective tax system. According to Panteghini (2005), neutrality can be approached by adjusting the firm's tax base depending on its level of returns.…”

Section: Tax Loss Treatment and Investmentsmentioning

confidence: 99%

Investment impact of tax loss treatment—empirical insights from a panel of multinationals

Dreßler,

Overesch

2012

Int Tax Public Finance

View full text Add to dashboard Cite

Die Dis cus si on Pape rs die nen einer mög lichst schnel len Ver brei tung von neue ren For schungs arbei ten des ZEW. Die Bei trä ge lie gen in allei ni ger Ver ant wor tung der Auto ren und stel len nicht not wen di ger wei se die Mei nung des ZEW dar.Dis cus si on Papers are inten ded to make results of ZEW research prompt ly avai la ble to other eco no mists in order to encou ra ge dis cus si on and sug gesti ons for revi si ons. The aut hors are sole ly respon si ble for the con tents which do not neces sa ri ly repre sent the opi ni on of the ZEW.Download this ZEW Discussion Paper from our ftp server:ftp://ftp.zew.de/pub/zew-docs/dp/dp10097.pdf Non-Technical SummaryWhile profits are taxed, no immediate tax refund is granted if a corporation suffers losses.Losses can only be used to offset profits generated in other periods or by affiliated companies.The tax loss offset rules, however, significantly differ across countries. While only some countries grant a loss carryback option, a loss carryforward is always possible. Yet, in some countries the intertemporal loss offset is subject to time restrictions. Moreover, several countries have a group taxation which allows consolidation of profits and losses across affiliated firms.This paper analyzes in how far multinational firms factor the differently strict tax loss treatment rules into their investment decisions. We consider two effects of tax loss treatment. Our results suggest that the existence of a group taxation rule in particular exerts a positive influence on investments, which is even stronger for firms with a relatively high probability to suffer losses. Regarding the investment structure, a group taxation regime makes multinational groups distribute their investments across more subsidiaries. Concerning the intertemporal loss offset, we find that investment levels are significantly affected by tax loss offset rules if a subsidiary operates in an industry where the probability to suffer losses is high. Interestingly, a broad time limit until unutilized losses forfeit, however, does not seem to hinder investments.In the second part of our analysis, we trace effects of existing tax loss carryforwards on investment decisions. Our results suggest that the tax rate elasticity of investment actually is significantly reduced if a subsidiary can offset taxable profits with losses carried forward from previous periods. Abstract: We analyze the impact of tax loss treatment on the size and structure of multinational investments. Basically, two effects of tax loss treatment can be expected. First, firms make their investment decisions in the face of potential future losses. Then, the various types of conceivable loss offset provisions affect investment decisions. Secondly, existing loss carryforwards resulting from losses in the past affect the tax rate-elasticity of current investment decisions. The empirical analysis is based on data of German multinationals. The data is taken from the MiDi database provided by the German Central Bank (Deutsche Bundesbank). Re...

show abstract

“…See Brown (1948), Samuelson (1964), Johansson (1969), Boadway and Bruce (1984), and Bond and Devereux (1995). Neutral tax systems under uncertainty are discussed by Niemann (1999), Panteghini (2001aPanteghini ( , 2001bPanteghini ( , 2005, Sureth (2002), and Sureth (2004, 2005).…”

Section: Prior Literaturementioning

confidence: 99%

“…Within a continous-time model Panteghini (2005) then extends his own analyses to include two-step investments and (partially) reversible decisions. In all of his studies Panteghini focuses on determining neutrality conditions, i.e.…”

mentioning

confidence: 99%

Asymmetric Taxation of Profits and Losses and its Influence on Investment Timing: Paradoxical Effects of Tax Increases

2012

View full text Add to dashboard Cite

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 in JEL-Classification: H21 · H25Abstract: Applying a time-discrete investment model and a setting with an entry and an exit option and cash flow uncertainty we present a dynamic analysis of the impact of various loss offset regimes on risky investment timing decisions. We find that a tax system with loss offset restrictions will not distort timing decisions if the investor can exit the project. By contrast, in a setting without exit flexibility a tax discrimination against losses can cause paradoxical effects. In that respect, we analytically identify conditions for higher taxes to increase investors' propensity to choose early investment and hence accelerate entrepreneurial investment.

show abstract

Asymmetric Taxation under Incremental and Sequential Investment

Cited by 32 publications

References 29 publications

S-based taxation under default risk

S-based taxation under default risk

Investment impact of tax loss treatment—empirical insights from a panel of multinationals

Asymmetric Taxation of Profits and Losses and its Influence on Investment Timing: Paradoxical Effects of Tax Increases

Contact Info

Product

Resources

About