The Debt Tax Shield, Economic Growth and Inequality

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Abstrakt

We study the general-equilibrium implications of the corporate debt tax shield in a growth economy that taxes household income and firm profits and redistributes tax revenues in anattempt to harmonize the lifetime consumption opportunities among households that differ in their endowments. Our model shows that in general equilibrium the tax shield’s reduction in the corporate after-tax borrowing rate is counteracted by an increase in the pre-tax rate. Our model further predicts the debt tax shield to lead to a higher growth rate of the economy and an increase in the degree of disparity in households’ lifetime consumption opportunities.
OriginalsprogEngelsk
Publikationsdato2019
Antal sider48
StatusUdgivet - 2019
BegivenhedEuropean Financial Management Association 2019 Annual Meetings - University of Azores, Ponta Delgada, Island of S. Miguel, Portugal
Varighed: 26 jun. 201929 jun. 2019
Konferencens nummer: 28
https://www.efmaefm.org/0EFMAMEETINGS/EFMA%20ANNUAL%20MEETINGS/2019-Azores/2019%20meetings.php

Konference

KonferenceEuropean Financial Management Association 2019 Annual Meetings
Nummer28
LokationUniversity of Azores
LandPortugal
ByPonta Delgada, Island of S. Miguel
Periode26/06/201929/06/2019
Internetadresse

Emneord

  • Debt tax shield
  • Macroeconomic growth
  • Redistributive tax system

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