Corporate Tax Asymmetries Under Investment Irreversibility

16 Pages Posted: 8 Sep 2001

See all articles by Paolo M. Panteghini

Paolo M. Panteghini

Department of Economics and Management; CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Date Written: August 2001

Abstract

This article studies the effects of corporate tax asymmetries on irreversible investment. We discuss an asymmetric tax scheme where the tax base is given by the firm's return, net of an imputation rate. When the firm's return is less than this rate, however, no tax refunds are allowed. Contrary to common winsdom, this asymmetric scheme may be neutral even when assuming a long-lasting income uncertainty. Neutrality holds even if we add both capital and political uncertainty.

JEL Classification: H25

Suggested Citation

Panteghini, Paolo M., Corporate Tax Asymmetries Under Investment Irreversibility (August 2001). Available at SSRN: https://ssrn.com/abstract=282310

Paolo M. Panteghini (Contact Author)

Department of Economics and Management ( email )

Contrada Santa Chiara 50
BRESCIA, BS 25122
Italy

CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.cesifo.de

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