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The Debt-Equity Bias: consequences and solutions

  • Serena Fatica

    ()

    (European Commission)

  • Thomas Hemmelgarn

    ()

    (European Commission)

  • Gaetan Nicodeme

    ()

    (European Commission)

The tax deductibility of interest payments in most corporate income tax systems coupled with no such measure for equity financing creates economic distortions and exacerbates leverage. This paper discusses the consequences of this debt bias and the possible remedies.

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File URL: http://ec.europa.eu/taxation_customs/resources/documents/taxation/gen_info/economic_analysis/tax_papers/taxation_paper_33_en.pdf
File Function: final version, 2012
Download Restriction: no

Paper provided by Directorate General Taxation and Customs Union, European Commission in its series Taxation Papers with number 33.

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Length: 18 pages
Date of creation: Aug 2012
Date of revision:
Publication status: Published in Reflets et Perspectives de la Vie Economique, 2013, 52(1), pp. 5-18.
Handle: RePEc:tax:taxpap:0033
Contact details of provider: Web page: http://ec.europa.eu/taxation_customs/index_en.htm

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