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Das Übergangsmodell der Einfachsteuer: Eine Effiziente Unternehmensbesteuerung?

Listed author(s):
  • Siemers, Lars-H. R.
  • Zöller, Daniel

We investigate the neutrality features of an ACE tax reform proposal suggested for the company tax reform in Germany. As a pure ACE tax system is not feasible in practice, certain elements have been changed in the proposal: the traditional income tax of non-corporations remains progressive; there is a flat tax rate for corporations, but there is also a tax levied on distributed profits. Similar to S-corporations in the USA, both non-corporations and corporations (if feasible) have the option to be either taxed at the personal level of the owners within the income tax or at the company level within the profit tax (so far corporate tax). In both cases, the companies have a claim on a operating expenditure for equity cost (ACE). To analyze the proposal we extend the neoclassical model by allowing for financial assets of companies. The proposal causes that investors distinguish two rates of discounting. Therefore, as we want to determine the optimal level of investment endogenously, we cannot maximize the market value of the company. The problem can be solved by maximizing the end value of the investments. We show that the proposed tax system guarantees financial, investment, legal form, and depreciation neutrality. Intertemporal or growth neutrality, however, is only generated financing investments by retaining profits.

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File URL: https://mpra.ub.uni-muenchen.de/757/1/MPRA_paper_757.pdf
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 757.

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Date of creation: Nov 2006
Handle: RePEc:pra:mprapa:757
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  1. 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.
  2. Franz W. Wagner, 2006. "Was bedeutet Steuervereinfachung wirklich?," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 7(1), pages 19-33, 02.
  3. Boskin, Michael J, 1978. "Taxation, Saving, and the Rate of Interest," Journal of Political Economy, University of Chicago Press, vol. 86(2), pages 3-27, April.
  4. Lietmeyer, Volker & Petzold, Oliver, 2005. "Bedingungen und Ziele für eine Reform der Unternehmensbesteuerung," Wirtschaftsdienst – Zeitschrift für Wirtschaftspolitik (1949 - 2007), ZBW – German National Library of Economics / Leibniz Information Centre for Economics, vol. 85(9), pages 590-599.
  5. Howitt, Peter & Sinn, Hans-Werner, 1989. "Gradual Reforms of Capital Income Taxation," American Economic Review, American Economic Association, vol. 79(1), pages 106-124, March.
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  7. Mervyn A. King, 1974. "Taxation and the Cost of Capital," Review of Economic Studies, Oxford University Press, vol. 41(1), pages 21-35.
  8. 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.
  9. Michael Keen & John King, 2002. "The Croatian profit tax: an ACE in practice," Fiscal Studies, Institute for Fiscal Studies, vol. 23(3), pages 401-418, September.
  10. 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.
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  12. Michael J. Boskin, 1978. "Taxation, Saving, and the Rate of Interest," NBER Chapters,in: Research in Taxation, pages 3-27 National Bureau of Economic Research, Inc.
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