Corporate Income Tax Reform in Switzerland

Martin Dietz and Christian Keuschnigg

Swiss Journal of Economics and Statistics (SJES), 2004, vol. 140, issue IV, 483-519

Abstract: This paper analyzes the likely economic consequences of a specific proposal for corporate income tax reform in Switzerland that is based on the recent ERU (2001) report. The proposal includes a partial dividend tax relief, more effective taxation of capital gains, and a property tax reduction, all relating to qualified stakes in corporate firms. Based on an analytical and quantitative analysis, we find that the reform removes an important tax barrier against dividend payments, reduces the cost of equity capital, thereby reduces debt leverage and encourages investment in the corporate sector. In stimulating transitional growth towards higher long-run income levels, the reform expands tax bases and thereby becomes considerably less costly in the long-run. A sensitivity analysis shows that the quantitative results are rather robust.

Keywords: Tax reform; financial policy; organizational choice; dynamic general equilibrium modeling (search for similar items in EconPapers)
JEL-codes: C68 G32 H25 (search for similar items in EconPapers)
Date: 2004
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Citations: View citations in EconPapers (7)

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Working Paper: Corporate Income Tax Reform in Switzerland (2003)
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Persistent link: https://EconPapers.repec.org/RePEc:ses:arsjes:2004-iv-2

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