The 2008 Financial Crisis: Implications for Income Tax Reform

Abstract:     
Tax rules encouraging excessive debt, complex financial transactions, poorly designed incentive compensation for corporate managers, and highly leveraged home ownership all may have contributed to the financial crisis, but do not appear to have been among the primary causes. Even without a strong causal link, however, the preexisting case for tax reform at all these margins arguably is strengthened by the 2008 financial crisis, which suggests that tax rules not only fell short of classic neutrality benchmarks but generally leaned in precisely the wrong direction.

Number of Pages in PDF File: 28

Keywords: tax reform, 2008 financial crisis, corporate integration, corporate finance, executive compensation

JEL Classification: H20, H24, H25

working papers series