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Corporate Income Tax Reform in Switzerland

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  • Martin D. Dietz

    ()

  • Christian Keuschnigg

    ()

Abstract

This paper analyzes the likely economic consequences of a specific proposal for corporate income tax reform in Switzerland that is based on the recent ERU (2001) report. The proposal includes a partial dividend tax relief, more effective taxation of capital gains, and a property tax reduction, all relating to qualified stakes in corporate firms. Based on an analytical and quantitative analysis, we find that the reform removes an important tax barrier against dividend payments, reduces the cost of equity capital, thereby reduces debt leverage and encourages investment in the corporate sector. In stimulating transitional growth towards higher long-run income levels, the reform expands tax bases and thereby becomes considerably less costly in the long-run. A sensitivity analysis shows that the quantitative results are rather robust.1

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Bibliographic Info

Paper provided by Department of Economics, University of St. Gallen in its series University of St. Gallen Department of Economics working paper series 2003 with number 2003-07.

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Length: 35 pages
Date of creation: Dec 2003
Date of revision:
Handle: RePEc:usg:dp2003:2003-07

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Web page: http://www.seps.unisg.ch/
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Keywords: Tax reform; financial policy; organizational choice; dynamic general equilibrium modeling.;

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References

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Citations

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Cited by:
  1. Martin D. Dietz & Christian Keuschnigg, 2005. "A Growth Oriented Dual Income Tax," CESifo Working Paper Series 1513, CESifo Group Munich.
  2. Leon Bettendorf & Albert van der Horst, 2006. "Documentation of CORTAX," CPB Memorandum 161, CPB Netherlands Bureau for Economic Policy Analysis.
  3. Doina Maria Radulescu & Michael Stimmelmayr, 2006. "Does Incorporation Matter? Quantifying the Welfare Loss of Non-Uniform Taxation across Sectors," Ifo Working Paper Series Ifo Working Papers No. 26, Ifo Institute for Economic Research at the University of Munich.
  4. Radulescu, Doina & Stimmelmayr, Michael, 2010. "The impact of the 2008 German corporate tax reform: A dynamic CGE analysis," Economic Modelling, Elsevier, vol. 27(1), pages 454-467, January.

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