Debt Bias and Other Distortions - read free eBook in online reader or directly download on the web page. Select files or add your book in reader. Download and read online ebook Debt Bias and Other Distortions write by International Monetary Fund. Fiscal Affairs Dept.. This book was released on 2009-12-06. Debt Bias and Other Distortions available in PDF, EPUB and Kindle. Tax distortions are likely to have encouraged excessive leveraging and other financial market problems evident in the crisis. These effects have been little explored, but are potentially macro-relevant. Taxation can result, for example, in a net subsidy to borrowing of hundreds of basis points, raising debt-equity ratios and vulnerabilities from capital inflows. This paper reviews key channels by which tax distortions can significantly affect financial markets, drawing implications for tax design once the crisis has passed.
Tax Biases to Debt Finance
Tax Biases to Debt Finance - read free eBook in online reader or directly download on the web page. Select files or add your book in reader. Download and read online ebook Tax Biases to Debt Finance write by Ruud A. de Mooij. This book was released on 2011-05-03. Tax Biases to Debt Finance available in PDF, EPUB and Kindle. Staff Discussion Notes showcase the latest policy-related analysis and research being developed by individual IMF staff and are published to elicit comment and to further debate. These papers are generally brief and written in nontechnical language, and so are aimed at a broad audience interested in economic policy issues. This Web-only series replaced Staff Position Notes in January 2011.
The Debt-equity Tax Bias
The Debt-equity Tax Bias - read free eBook in online reader or directly download on the web page. Select files or add your book in reader. Download and read online ebook The Debt-equity Tax Bias write by Comisión Europea. Dirección General de Asuntos Económicos y Financieros. This book was released on 2012. The Debt-equity Tax Bias available in PDF, EPUB and Kindle. 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.
Tax Policy, Leverage and Macroeconomic Stability
Tax Policy, Leverage and Macroeconomic Stability - read free eBook in online reader or directly download on the web page. Select files or add your book in reader. Download and read online ebook Tax Policy, Leverage and Macroeconomic Stability write by International Monetary Fund. Fiscal Affairs Dept.. This book was released on 2016-12-10. Tax Policy, Leverage and Macroeconomic Stability available in PDF, EPUB and Kindle. Risks to macroeconomic stability posed by excessive private leverage are significantly amplified by tax distortions. ‘Debt bias’ (tax provisions favoring finance by debt rather than equity) has increased leverage in both the household and corporate sectors, and is now widely recognized as a significant macroeconomic concern. This paper presents new evidence of the extent of debt bias, including estimates for banks and non-bank financial institutions both before and after the global financial crisis. It presents policy options to alleviate debt bias, and assesses their effectiveness. The paper finds that thin capitalization rules restricting interest deductibility have only partially been able to address debt bias, but that an allowance for corporate equity has generally proved effective. The paper concludes that debt bias should feature prominently in countries’ tax reform plans in the coming years.
Curbing Corporate Debt Bias
Curbing Corporate Debt Bias - read free eBook in online reader or directly download on the web page. Select files or add your book in reader. Download and read online ebook Curbing Corporate Debt Bias write by Ruud A. de Mooij. This book was released on 2017-02-10. Curbing Corporate Debt Bias available in PDF, EPUB and Kindle. Tax provisions favoring corporate debt over equity finance (“debt bias”) are widely recognized as a risk to financial stability. This paper explores whether and how thin-capitalization rules, which restrict interest deductibility beyond a certain amount, affect corporate debt ratios and mitigate financial stability risk. We find that rules targeted at related party borrowing (the majority of today’s rules) have no significant impact on debt bias—which relates to third-party borrowing. Also, these rules have no effect on broader indicators of firm financial distress. Rules applying to all debt, in contrast, turn out to be effective: the presence of such a rule reduces the debt-asset ratio in an average company by 5 percentage points; and they reduce the probability for a firm to be in financial distress by 5 percent. Debt ratios are found to be more responsive to thin capitalization rules in industries characterized by a high share of tangible assets.
