Optimal Corporate Taxation Under Financial Frictions

Eduardo Davila and Benjamin Hebert

Research Papers from Stanford University, Graduate School of Business

Abstract: We study optimal corporate taxation when firms are financially constrained. We describe a corporate taxation principle: taxes should be levied on unconstrained firms, which value resources inside the firm less than constrained firms. Under complete information, this principle completely characterizes optimal corporate tax policy. With incomplete information, the government can use payout policy to elicit whether a firm is constrained, and tax accordingly. In our static model, optimal corporate taxation can be implemented by a corporate dividend tax, and in our dynamic model, the optimal sequence of mechanisms can also be implemented by a corporate dividend tax.

JEL-codes: G38 H21 H25 (search for similar items in EconPapers)
Date: 2019-01
New Economics Papers: this item is included in nep-acc, nep-cfn, nep-dge and nep-pbe
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.gsb.stanford.edu/gsb-cmis/gsb-cmis-download-auth/442436
Our link check indicates that this URL is bad, the error code is: 404 Not Found

Related works:
Journal Article: Optimal Corporate Taxation Under Financial Frictions (2023)
Working Paper: Optimal Corporate Taxation Under Financial Frictions (2019)
Working Paper: Optimal Corporate Taxation under Financial Frictions (2017)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ecl:stabus:3594

Access Statistics for this paper

More papers in Research Papers from Stanford University, Graduate School of Business Contact information at EDIRC.
Bibliographic data for series maintained by ().