Capital Taxes with Real and Financial Frictions

45 Pages Posted: 24 Jan 2009  

Jason Matthew DeBacker

University of South Carolina - Darla Moore School of Business

Date Written: January, 23 2009

Abstract

Models of capital taxation either ignore the real costs of adjusting capital or assume quadratic costs of adjustment. Furthermore, while the financial literature does include financial frictions alongside taxes, this literature gives a superficial treatment to the real costs of adjustment and does not focus on traditional public finance questions such as the aggregate impact of tax policy. This paper merges these diverse literatures, focusing on how frictions, real and financial, affect the outcomes of capital tax policy.

Keywords: Corporate Finance, Firm Behavior, Capital Taxes

JEL Classification: D21, E22, G11, H25

Suggested Citation

DeBacker, Jason Matthew, Capital Taxes with Real and Financial Frictions (January, 23 2009). Available at SSRN: https://ssrn.com/abstract=1332158 or http://dx.doi.org/10.2139/ssrn.1332158

Jason Matthew DeBacker (Contact Author)

University of South Carolina - Darla Moore School of Business ( email )

The Francis M. Hipp Building
1705 College Street
Columbia, SC 29208
United States

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