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Wirkungen einer Abgeltungssteuer auf Investitionsentscheidungen und Kapitalstruktur von Unternehmen
[Effects of a flat rate tax on investment decisions and capital structure of companies]

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  • Kiesewetter, Dirk
  • Lachmund, Andreas

Abstract

Recently, there have been various proposals in Germany to exempt interest income of individuals from progressive income taxation, and to levy a flat source tax, instead. The isolated introduction of a flat tax on interest income would have a significant effect on all investment and financing decisions of investors in individual enterprises, partnerships and corporations. Any equity-financed investment subject to regular taxation would become relatively less attractive compared to interest income subject to the flat tax. This paper analyzes the possible impact of a flat rate tax on business decisions in the context of the German income and corporation tax (sections 2 and 3). Proposals for changes in corporate taxation are developed to avoid the undesired effects of a flat tax on financing decisions (section 4). In particular we show that this is possible without lowering the tax burden on corporate profits to the level of the flat rate tax.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 27177.

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Date of creation: Apr 2004
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Handle: RePEc:pra:mprapa:27177

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Keywords: Abgeltungssteuer; Unternehmensbesteuerung; Finanzierungsentscheidungen;

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  1. Peter Birch Sørensen, 2003. "Neutral Taxation of Shareholder Income: A Norwegian Tax Reform Proposal," CESifo Working Paper Series 1036, CESifo Group Munich.
  2. Peter Sørensen, 1994. "From the global income tax to the dual income tax: Recent tax reforms in the Nordic countries," International Tax and Public Finance, Springer, vol. 1(1), pages 57-79, February.
  3. Alan Auerbach & David Bradford, 2001. "Generalized Cash Flow Taxation," CESifo Working Paper Series 425, CESifo Group Munich.
  4. Robin Boadway & Neil Bruce, 1982. "A General Proposition on the Design of a Neutral Business Tax," Working Papers 461, Queen's University, Department of Economics.
  5. Steve Bond & Michael Devereux, 1993. "On the design of a neutral business tax under uncertainty," IFS Working Papers W93/01, Institute for Fiscal Studies.
  6. Annette Alstadsæter, 2003. "The Dual Income Tax and Firms' Income Shifting through the Choice of Organizational Form and Real Capital Investments," CESifo Working Paper Series 1018, CESifo Group Munich.
  7. Steve Bond & Michael Devereux, 1999. "Generalised R-based and S-based taxes under uncertainty," IFS Working Papers W99/09, Institute for Fiscal Studies.
  8. Nielsen, Soren Bo & Sorensen, Peter Birch, 1997. "On the optimality of the Nordic system of dual income taxation," Journal of Public Economics, Elsevier, vol. 63(3), pages 311-329, February.
  9. Homburg, Stefan, 2010. "Allgemeine Steuerlehre," EconStor Books, ZBW - German National Library of Economics, number 92547, November.
  10. Peter Birch Sørensen, 2003. "Neutral Taxation of Shareholder Income: A Norwegian Tax Reform Proposal," EPRU Working Paper Series 03-06, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
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