Generalised R-based and S-based taxes under uncertainty
This paper considers the relationship between two general neutral business tax structures, which we label the ?irm tax' and the ?hareholder tax? The well-known R-based and S-based cash flow taxes, analysed by Meade (1978), are special cases of these two taxes. We demonstrate the neutrality of both taxes in the presence of uncertainty, and characterise the tax rules required in the event of default and wind-up. Our analysis provides the first proof of the neutrality of the S-based cash flow tax and the Allowance for Corporate Equity (ACE) corporation tax under uncertainty. We also discuss implementation and tax avoidance issues.
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|Date of creation:||Feb 1999|
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References listed on IDEAS
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- Boadway, Robin & Bruce, Neil, 1984.
"A general proposition on the design of a neutral business tax,"
Journal of Public Economics,
Elsevier, vol. 24(2), pages 231-239, July.
- 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.
- Bonds, Stephen R. & Devereux, Michael P., 1995.
"On the design of a neutral business tax under uncertainty,"
Journal of Public Economics,
Elsevier, vol. 58(1), pages 57-71, September.
- Steve Bond & Michael Devereux, 1993. "On the design of a neutral business tax under uncertainty," IFS Working Papers W93/01, Institute for Fiscal Studies.
- King, Mervyn A., 1975. "Taxation, corporate financial policy, and the cost of capital : A comment," Journal of Public Economics, Elsevier, vol. 4(3), pages 271-279, August.
- Fane, G., 1987. "Neutral taxation under uncertainty," Journal of Public Economics, Elsevier, vol. 33(1), pages 95-105, June.
- Stiglitz, Joseph E., 1973. "Taxation, corporate financial policy, and the cost of capital," Journal of Public Economics, Elsevier, vol. 2(1), pages 1-34, February.
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