The Debt-Equity Bias: consequences and solutions

Serena Fatica, Thomas Hemmelgarn () and Gaëtan Nicodème

No 33, Taxation Papers from Directorate General Taxation and Customs Union, European Commission

Abstract: The tax deductibility of interest payments in most corporate income tax systems coupled with no such measure for equity financing creates economic distortions and exacerbates leverage. This paper discusses the consequences of this debt bias and the possible remedies.

Keywords: Taxation; Financial sector; Debt; Allowance for Corporate Equity; Comprehensive Business Income Tax; corporate structure. (search for similar items in EconPapers)
JEL-codes: G21 G32 H25 H32 (search for similar items in EconPapers)
Pages: 18 pages
Date: 2012-08
New Economics Papers: this item is included in nep-acc and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)

Published in Reflets et Perspectives de la Vie Economique, 2013, 52(1), pp. 5-18.

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Related works:
Journal Article: The Debt-Equity Tax Bias: Consequences and Solutions (2013)
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