Business Tax Policy Under Default Risk

20 Pages Posted: 25 Jul 2019

See all articles by Nicola Comincioli

Nicola Comincioli

University of Brescia

Sergio Vergalli

University of Brescia - Department of Economics; Fondazione Eni Enrico Mattei (FEEM), Milan

Paolo M. Panteghini

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

Multiple version iconThere are 2 versions of this paper

Date Written: 2019

Abstract

In this article we use a stochastic model with one representative firm to study business tax policy under default risk. We will show that, for a given tax rate, the government has an incentive to reduce (increase) financial instability and default costs if its objective function is welfare (tax revenue).

Keywords: capital structure, default risk, business taxation and welfare

JEL Classification: H250, G330, G380

Suggested Citation

Comincioli, Nicola and Vergalli, Sergio and Panteghini, Paolo M., Business Tax Policy Under Default Risk (2019). CESifo Working Paper No. 7664. Available at SSRN: https://ssrn.com/abstract=3422246

Nicola Comincioli (Contact Author)

University of Brescia ( email )

Piazza del Mercato, 15
25122 Brescia
Italy

Sergio Vergalli

University of Brescia - Department of Economics ( email )

Via San Faustino 74B
Brescia, 25122
Italy

Fondazione Eni Enrico Mattei (FEEM), Milan ( email )

Corso Magenta 63
20123 Milan
Italy

Paolo M. Panteghini

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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