Taxes, Loans and Inflation

Taxes, Loans and Inflation
Author: C. Eugene Steuerle
Publisher: Brookings Institution Press
Total Pages: 224
Release: 2010-12-01
Genre: Business & Economics
ISBN: 9780815721031

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Income from capital receives uneven treatment in both the tax system and the loan markets. This affects almost every investment decision make by the individuals, business, and government and causes major disruptions in the economy. In this book C. Eugene Steuerle shows how the misallocation of capital results from the interaction of tax laws, the operation of the market for loanable funds, and inflation. He first analyzes the taxation of capital income, focusing on the distortions caused by tax arbitrage and on inflation-induced discriminations among both taxpayer and borrowers. The author then applies this analysis to several related issues. He concludes with a reform agenda that calls for the adoption of a broader-based, flatter-rate income tax.

Inflation

Inflation
Author: Glenn P. Jenkins
Publisher: Economic Council of Canada
Total Pages: 168
Release: 1977
Genre: Accounting
ISBN:

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Monograph on the financial aspects of inflation regarding profits and income taxes in the business sector in Canada - covers corporation taxes, cash flow effects, interest rates, capital cost allowances, depreciation expenses, etc. Bibliography pp. 139 and 140, graphs and statistical tables.

Corporate Tax Reform: From Income to Cash Flow Taxes

Corporate Tax Reform: From Income to Cash Flow Taxes
Author: Benjamin Carton
Publisher: International Monetary Fund
Total Pages: 34
Release: 2019-01-16
Genre: Business & Economics
ISBN: 1484395174

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This paper uses a multi-region, forward-looking, DSGE model to estimate the macroeconomic impact of a tax reform that replaces a corporate income tax (CIT) with a destination-based cash-flow tax (DBCFT). Two key channels are at play. The first channel is the shift from an income tax to a cash-flow tax. This channel induces the corporate sector to invest more, boosting long-run potential output, GDP and consumption, but crowding out consumption in the short run as households save to build up the capital stock. The second channel is the shift from a taxable base that comprises domestic and foreign revenues, to one where only domestic revenues enter. This leads to an appreciation of the currency to offset the competitiveness boost afforded by the tax and maintain domestic investment-saving equilibrium. The paper demonstrates that spillover effects from the tax reform are positive in the long run as other countries’ exports benefit from additional investment in the country undertaking the reform and other countries’ domestic demand benefits from improved terms of trade. The paper also shows that there are substantial benefits when all countries undertake the reform. Finally, the paper demonstrates that in the presence of financial frictions, corporate debt declines under the tax reform as firms are no longer able to deduct interest expenses from their profits. In this case, the tax shifting results in an increase in the corporate risk premia, a near-term decline in output, and a smaller long-run increase in GDP.

The Effects of Taxation on Capital Accumulation

The Effects of Taxation on Capital Accumulation
Author: Martin Feldstein
Publisher: University of Chicago Press
Total Pages: 501
Release: 2009-05-15
Genre: Business & Economics
ISBN: 0226241785

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Research on capital formation has long been a major focus of studies sponsored by the National Bureau of Economic Research because of the crucial role of capital accumulation in the process of economic growth. The papers in this volume examine the influence of taxes on capital formation, with specific focus on the determinants of saving and the process of investment in plant and equipment.

Inflation, Taxation and Corporate Investment in the U.S. During the Great Inflation

Inflation, Taxation and Corporate Investment in the U.S. During the Great Inflation
Author: Yevhenii Usenko
Publisher:
Total Pages: 0
Release: 2023
Genre:
ISBN:

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U.S. corporate taxation is not neutral to inflation. Two of its features -- historical cost depreciation and FIFO inventory accounting -- are expected to lower real after-tax corporate cash flows and, thereby, make investment less attractive when expected inflation is elevated. Using Compustat data for 1965-1980 and a difference-in-differences research design, I do not find evidence in support of this hypothesis. I discuss possible explanations for this non-result. In addition, I find a robust effect of statutory tax changes on corporate investment during the Great Inflation. The effect is economically meaningful and consistent with the prior literature: a tax reform that increases firm's cost of capital by 10% lowers investment of affected firms by 2 percentage points of total assets relative to firms not affected by the reform.

The Treatment of Companies Under Cash Flow Taxes

The Treatment of Companies Under Cash Flow Taxes
Author: Emil McKee Sunley
Publisher: World Bank Publications
Total Pages: 47
Release: 1989
Genre: Capital movements
ISBN:

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Cash flow taxes eliminate many of the problems of the corporate income tax, but they have significant administrative, transitional, and international problems, especially for developing countries.

Inflation-Proof Tax System? Some Lessons From Israel

Inflation-Proof Tax System? Some Lessons From Israel
Author: International Monetary Fund
Publisher: International Monetary Fund
Total Pages: 28
Release: 1990-05-01
Genre: Business & Economics
ISBN: 1451973640

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This paper strengthens the claim made by Vito Tanzi that when the effect of a high inflation on the tax system is taken into account, then the overall revenues from inflationary finance may well be negative. The paper analyzes some genuine and neat measures taken in Israel in an attempt to construct an inflation-proof tax system. Despite these very elegant measures, the paper concludes that the Israeli experience suggests that it is more appropriate to talk about the “inflation subsidy” rather than the “inflation tax.”

Tax Policy and Investment

Tax Policy and Investment
Author: Kevin A. Hassett
Publisher: American Enterprise Institute
Total Pages: 94
Release: 1999
Genre: Business & Economics
ISBN: 9780844770864

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This book studies topics relating to fundamental tax reform. The topics include, among others, the effects of taxation on household saving, the effects of reducing taxes on individuals' work effort, issues in the taxation of financial services, and international issues in consumption taxation.