The Impact of Inflation on Corporate Taxes and the Cash Flows of Business
Author | : Glenn P. Jenkins |
Publisher | : Ottawa, Ont. : Council Secretary, Economic Council of Canada |
Total Pages | : 68 |
Release | : 1985 |
Genre | : Canada |
ISBN | : |
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Author | : Glenn P. Jenkins |
Publisher | : Ottawa, Ont. : Council Secretary, Economic Council of Canada |
Total Pages | : 68 |
Release | : 1985 |
Genre | : Canada |
ISBN | : |
Author | : C. Eugene Steuerle |
Publisher | : Brookings Institution Press |
Total Pages | : 224 |
Release | : 2010-12-01 |
Genre | : Business & Economics |
ISBN | : 9780815721031 |
Income from capital receives uneven treatment in both the tax system and the loan markets. This affects almost every investment decision make by the individuals, business, and government and causes major disruptions in the economy. In this book C. Eugene Steuerle shows how the misallocation of capital results from the interaction of tax laws, the operation of the market for loanable funds, and inflation. He first analyzes the taxation of capital income, focusing on the distortions caused by tax arbitrage and on inflation-induced discriminations among both taxpayer and borrowers. The author then applies this analysis to several related issues. He concludes with a reform agenda that calls for the adoption of a broader-based, flatter-rate income tax.
Author | : Glenn P. Jenkins |
Publisher | : Economic Council of Canada |
Total Pages | : 168 |
Release | : 1977 |
Genre | : Accounting |
ISBN | : |
Monograph on the financial aspects of inflation regarding profits and income taxes in the business sector in Canada - covers corporation taxes, cash flow effects, interest rates, capital cost allowances, depreciation expenses, etc. Bibliography pp. 139 and 140, graphs and statistical tables.
Author | : Benjamin Carton |
Publisher | : International Monetary Fund |
Total Pages | : 34 |
Release | : 2019-01-16 |
Genre | : Business & Economics |
ISBN | : 1484395174 |
This paper uses a multi-region, forward-looking, DSGE model to estimate the macroeconomic impact of a tax reform that replaces a corporate income tax (CIT) with a destination-based cash-flow tax (DBCFT). Two key channels are at play. The first channel is the shift from an income tax to a cash-flow tax. This channel induces the corporate sector to invest more, boosting long-run potential output, GDP and consumption, but crowding out consumption in the short run as households save to build up the capital stock. The second channel is the shift from a taxable base that comprises domestic and foreign revenues, to one where only domestic revenues enter. This leads to an appreciation of the currency to offset the competitiveness boost afforded by the tax and maintain domestic investment-saving equilibrium. The paper demonstrates that spillover effects from the tax reform are positive in the long run as other countries’ exports benefit from additional investment in the country undertaking the reform and other countries’ domestic demand benefits from improved terms of trade. The paper also shows that there are substantial benefits when all countries undertake the reform. Finally, the paper demonstrates that in the presence of financial frictions, corporate debt declines under the tax reform as firms are no longer able to deduct interest expenses from their profits. In this case, the tax shifting results in an increase in the corporate risk premia, a near-term decline in output, and a smaller long-run increase in GDP.
Author | : Michael W. Mahner, Timothy J. Nantell |
Publisher | : |
Total Pages | : 19 |
Release | : 1982 |
Genre | : |
ISBN | : |
Author | : Yevhenii Usenko |
Publisher | : |
Total Pages | : 0 |
Release | : 2023 |
Genre | : |
ISBN | : |
U.S. corporate taxation is not neutral to inflation. Two of its features -- historical cost depreciation and FIFO inventory accounting -- are expected to lower real after-tax corporate cash flows and, thereby, make investment less attractive when expected inflation is elevated. Using Compustat data for 1965-1980 and a difference-in-differences research design, I do not find evidence in support of this hypothesis. I discuss possible explanations for this non-result. In addition, I find a robust effect of statutory tax changes on corporate investment during the Great Inflation. The effect is economically meaningful and consistent with the prior literature: a tax reform that increases firm's cost of capital by 10% lowers investment of affected firms by 2 percentage points of total assets relative to firms not affected by the reform.
Author | : Emil McKee Sunley |
Publisher | : World Bank Publications |
Total Pages | : 47 |
Release | : 1989 |
Genre | : Capital movements |
ISBN | : |
Cash flow taxes eliminate many of the problems of the corporate income tax, but they have significant administrative, transitional, and international problems, especially for developing countries.
Author | : International Monetary Fund |
Publisher | : International Monetary Fund |
Total Pages | : 28 |
Release | : 1990-05-01 |
Genre | : Business & Economics |
ISBN | : 1451973640 |
This paper strengthens the claim made by Vito Tanzi that when the effect of a high inflation on the tax system is taken into account, then the overall revenues from inflationary finance may well be negative. The paper analyzes some genuine and neat measures taken in Israel in an attempt to construct an inflation-proof tax system. Despite these very elegant measures, the paper concludes that the Israeli experience suggests that it is more appropriate to talk about the “inflation subsidy” rather than the “inflation tax.”
Author | : Kevin A. Hassett |
Publisher | : A E I Press |
Total Pages | : 92 |
Release | : 1999 |
Genre | : Business & Economics |
ISBN | : 9780844770864 |
This book studies topics relating to fundamental tax reform. The topics include, among others, the effects of taxation on household saving, the effects of reducing taxes on individuals' work effort, issues in the taxation of financial services, and international issues in consumption taxation.