Eigenkapitalverzehr und Substanzbesteuerung deutscher Unternehmen durch eine Vermögensteuer – eine empirische Analyse

Hoppe, Thomas; Maiterth, Ralf; Sureth-Sloane, Caren

doi:10.1007/s41471-016-0005-x

Cited by 3 publications

(3 citation statements)

References 26 publications

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“…As both tax risk in general and capital taxation are often claimed to be harmful for investment (for empirical evidence see Dye, McGuire, and Merriman 2001, Allee, Lynch, Petroni, and Schroeder 2015, Hoppe, Maiterth, and Sureth 2016 and are expected to delay investment activities, we analyze the investment e¤ects of capital tax uncertainty.…”

Section: Introductionmentioning

confidence: 99%

Does Capital Tax Uncertainty Delay Irreversible Risky Investment?

Niemann

Sureth-Sloane

2016

SSRN Journal

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Tax uncertainty is often claimed to be harmful for investments. Capital taxes, such as property and wealth taxes, are particularly exposed to tax uncertainty. Capital tax uncertainty emerges from expected tax reforms, the unclear outcome of future tax audits, and simpli…ed estimates of capital tax bases in investment models. Uncertain returns on investment as well as stochastic taxation contribute to overall uncertainty and may significantly a¤ect investment decisions. Hitherto, it is unknown how capital tax uncertainty a¤ects investment timing. However, it is well known that both uncertainty and capital tax may be harmful for investment and decelerate investment activities. We are the …rst to study the investment timing e¤ects of stochastic capital taxes in a real options setting with risky investment opportunities. Our results indicate that even risk neutral investors are sensitive with respect to capital tax risk and may react in a surprising manner to a newly introduced stochastic capital tax. As an apparently paradoxical investment e¤ect, we …nd that increased capital tax uncertainty can accelerate risky investment if such uncertainty is su¢ ciently low compared to cash ‡ow uncertainty. In contrast, high capital tax risk delays high-risk innovative investment projects. To reduce unintended consequences of uncertain tax policy, tax legislators and tax authorities should avoid high levels of capital tax uncertainty. Broadening the capital tax base or increasing the capital tax rate induces ambiguous timing e¤ects. Furthermore, high-growth investments are likely to be postponed if they experience a capital tax cut. Since investment reactions upon tax reforms are well-known to a¤ect income and wealth distribution, reliable estimations of the impact of taxes on economic decisions are necessary.JEL classi…cation: H25; H21

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Section: Introductionmentioning

confidence: 99%

Does Capital Tax Uncertainty Delay Irreversible Risky Investment?

Niemann

Sureth-Sloane

2016

SSRN Journal

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“…However, until now, no study has been conducted that addresses the investment and timing effects of a wealth tax in a stochastic environment with random cash flows. Particularly, as studies on the recently proposed tax on corporate and individual wealth in Germany indicate severe distortions (Spengel et al 2013;Hoppe et al 2016), the investment effects have to be analyzed prior to discussing potential distributional consequences. For example, Hoppe et al (2016) find in their company data-based simulation that on average 15% of corporations' equity is lost after six years of wealth taxation implying high risk for firms and jobs.…”

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confidence: 99%

“…Furthermore,Atkinson (1971),Saez and Veall (2005), Piketty (2014),Auerbach and Hassett (2015). See, for example,Cnossen and Bovenberg (2001) for the Netherlands,Edson (2012) for Norway, Glennerster (2012) for U.K.,Keuschnigg et al (2013) for Austria,Sureth and Maiterth (2008),Maiterth and Houben (2012),Spengel et al (2013),Bach et al (2014),Hoppe et al (2016) for Germany.…”

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Investment timing effects of wealth taxes under uncertainty and irreversibility

Niemann

Sureth-Sloane

2018

J Bus Econ

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We analyze the impact of wealth taxes on investment timing decisions under uncertainty and irreversibility by employing a real options model of the Dixit/Pindyck type. Considering that wealth taxes have been (re-)introduced or are under discussion in many countries, investors need decision rules for tax systems with wealth taxation. We integrate different valuation methods for wealth tax purposes, distinguish between broadly and narrowly defined wealth taxes and vary the wealth tax rate to ascertain which wealth tax design is more or less likely to accelerate or delay investment. Our main findings are threefold. First, historical cost valuation reduces the distortive timing effects of wealth taxation compared to fair value accounting. Second, broadening the wealth tax base tends to accelerate investment during high interest rate periods and delay investment during low interest rate periods. Our results predict that wealth taxes with a broad tax base are likely to discourage risky investment in times of near-zero interest rates. These distortive wealth tax base effects, however, can be avoided by granting sufficiently high depreciation deductions for wealth tax purposes. Third, the investment timing effects of wealth tax rate variations are very sensitive to the riskiness of the underlying investment. Moreover, investment timing effects crucially depend upon the depreciation rate for wealth tax purposes. A tax legislator who aims to encourage risk taking should introduce generous depreciation deductions. Our study indicates that if a wealth tax is considered to be politically inevitable, possible harmful investment effects can be mitigated by choosing appropriate valuation methods and parameters.

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Relevanz der deutschen Zinsschranke ffr Personenunternehmen Eine dynamische Analyse der Betroffenheit (Relevance of the German Interest Barrier for Partnerships A Dynamic Analysis of Consternation)

Alberternst

2016

SSRN Journal

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Eigenkapitalverzehr und Substanzbesteuerung deutscher Unternehmen durch eine Vermögensteuer – eine empirische Analyse

Cited by 3 publications

References 26 publications

Does Capital Tax Uncertainty Delay Irreversible Risky Investment?

Does Capital Tax Uncertainty Delay Irreversible Risky Investment?

Investment timing effects of wealth taxes under uncertainty and irreversibility

Relevanz der deutschen Zinsschranke ffr Personenunternehmen Eine dynamische Analyse der Betroffenheit (Relevance of the German Interest Barrier for Partnerships A Dynamic Analysis of Consternation)

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