The Debt-Equity Bias: consequences and solutions

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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Year of publication:	2012-08
Authors:	Fatica, Serena ; Hemmelgarn, Thomas ; Nicodeme, Gaetan
Institutions:	General Directorate Taxation and Custom Union, European Commission
Subject:	Taxation \| Financial sector \| Debt \| Allowance for Corporate Equity \| Comprehensive Business Income Tax \| corporate structure

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Extent:	application/pdf
Series:	Taxation Papers.
Type of publication:	Book / Working Paper
Notes:	Published in Reflets et Perspectives de la Vie Economique, 2013, 52(1), pp. 5-18. Number 33 18 pages
Classification:	H25 - Business Taxes and Subsidies ; H32 - Firm ; G21 - Banks; Other Depository Institutions; Mortgages ; G32 - Financing Policy; Capital and Ownership Structure
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10010799031