Tax Rate Uncertainty, Investment Decisions, and Tax Neutrality

Rainer Niemann ()

Asia-Pacific Financial Markets, 2004, vol. 11, issue 3, pages 265-281

Abstract: This article deals with the effects of tax rate uncertainty (TRU) on individual investment behavior. We show that under risk neutrality as well as under risk aversion, increased TRU has an ambiguous impact on investment, depending on the investment project's structure of cash flows and depreciation deductions. Although the investment effects are small the popular view that tax policy uncertainty depresses real investment is rejected. Further, tax neutrality in the light of tax policy uncertainty is defined more precisely. Neutrality results for the Johansson-Samuelson tax and the cash flow tax that are known from certainty are confirmed under TRU. Copyright Kluwer Academic Publishers 2004

Keywords: investment; tax policy uncertainty; tax neutrality (search for similar items in EconPapers)

Downloads: (external link)
http://hdl.handle.ne ... .0000021971.56588.34 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Access Statistics for this article

Asia-Pacific Financial Markets is edited by Ryozo Miura

More articles in Asia-Pacific Financial Markets from Springer
Series data maintained by Christopher F. Baum ().