The Tax Elasticity of Corporate Debt: A Synthesis of Size and Variations

Mooij, Ruud de

doi:10.5089/9781455253340.001

Cited by 34 publications

(31 citation statements)

References 45 publications

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“…The effect is also quite large. It is perhaps not dramatic, but, notably, the long‐run marginal impact of an increase in the corporate tax rate of 0.25 in column is strikingly close to the average marginal response of 0.28 found for nonfinancial firms in the meta‐analysis of De Mooij (). Capital requirements thus do not seem, on average, to make banks less responsive to tax than nonfinancial firms.…”

Section: Resultssupporting

confidence: 70%

Debt, Taxes, and Banks

Mooij¹,

Keen²

2016

Journal of Money, Credit and Banking

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Understanding the impact on banks’ capital structures of tax biases toward debt finance is critical to assessing policy responses to socially excessive bank leverage—but there is no empirical evidence of its extent. Guided by some simple theory, this paper explores this impact for a large panel of banks in 82 countries. On average, the tax sensitivity of banks’ leverage proves significant and about as large as for nonfinancial firms. Somewhat counterintuitively, but as the theory suggests, taxation has little impact on the use of hybrids. Banks holding smaller equity buffers and larger banks are noticeably less sensitive to tax.

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Section: Resultssupporting

confidence: 70%

Debt, Taxes, and Banks

Mooij¹,

Keen²

2016

Journal of Money, Credit and Banking

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“…They also fail to include the larger welfare costs of the negative externalities of using debt such as the systemic risk, the probability of default and the social costs of business cycle fluctuations. Finally, they do not take into account the distortions created by debt-shifting activities and the misallocation due to international tax arbitrage as well as the administrative and compliance costs (de Mooij, 2011a). Consequently, taking all these additional elements into account, the welfare impact can be assumed higher than what has been found in the literature so far.…”

Section: Impact Of Welfarementioning

confidence: 96%

“…Several recent works have been carried out on this topic and we partially draw on them. In particular, de Mooij (2011aMooij ( , 2011b and Graham (2011) offer a comprehensive discussion of the issue, while Shaviro (2011) studies the bias in the context of the financial crisis.…”

Section: Introductionmentioning

confidence: 99%

The Debt-Equity Tax Bias: Consequences and Solutions

Fatica¹,

Hemmelgarn²,

Nicodème³

2013

Reflets Et Perspectives De La Vie Économique

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“…Given that corporate taxes reduce FDI and the presence of foreign multinational enterprises they can hinder technology transfers and knowledge spill-overs to domestic firms. Also, corporate taxes distort corporate financing decisions, favouring debt over equity since interest payments on debt are generally deductible from taxable profits, while dividend payments are not (de Mooij, 2011;2012). This can affect productivity if it distorts the allocation of investment towards firms that can raise debt easily over those that have to rely on equity finance, such as knowledge-based innovative firms investing in intangible assets (OECD, 2009).…”

mentioning

confidence: 99%

Public Finance, Economic Growth and Inequality

Johansson¹

2016

OECD Economics Department Working Papers

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JT03405922Complete document available on OLIS in its original format This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. ECO/WKP(2016)70 Unclassified English -Or. English ECO/WKP(2016)70 2 OECD Working Papers should not be reported as representing the official views of the OECD or of its member countries. The opinions expressed and arguments employed are those of the author(s).Working Papers describe preliminary results or research in progress by the author(s) and are published to stimulate discussion on a broad range of issues on which the OECD works.Comments on Working Papers are welcomed, and may be sent to OECD Economics Department, 2 rue André Pascal, 75775 Paris Cedex 16, France, or by e-mail to eco.contact@oecd.org. This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area.The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law.Latvia was not an OECD Member at the time of preparation of this publication. Accordingly, Latvia does not appear in the list of OECD Members and is not included in the zone aggregates. © OECD (2016)You can copy, download or print OECD content for your own use, and you can include excerpts from OECD publications, databases and multimedia products in your own documents, presentations, blogs, websites and teaching materials, provided that suitable acknowledgment of OECD as source and copyright owner is given. All requests for commercial use and translation rights should be submitted to rights@oecd.org ECO/WKP(2016)70 3 ABSTRACT/RÉSUMÉPublic finance, economic growth and inequality: A survey of the evidence This paper reviews the key issues concerning the impact of public spending and taxation on long-run growth and inequality and takes stock of existing theoretical and empirical studies. Overall, the evidence highlights that the size of the government matters for long-term growth as a too large government may undermine growth through the cost of financing public spending. A reallocation of public spending towards infrastructure and education would raise income in the long run, whereas increasing social welfare spending can reduce inequality as such spending increases redistribution and risk sharing. Similarly, the available evidence also supports the hypothesis that some taxes are more distortionary than others, with income taxes found to be more harmful for growth than consumption and property taxes. However, a tax shift from income towards consumption taxes has equity implications, since income taxes are general...

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The Tax Elasticity of Corporate Debt: A Synthesis of Size and Variations

Cited by 34 publications

References 45 publications

Debt, Taxes, and Banks

Debt, Taxes, and Banks

The Debt-Equity Tax Bias: Consequences and Solutions

Public Finance, Economic Growth and Inequality

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