Optimal Corporate Taxation Under Financial Frictions

• 成果类型: Article
• 署名作者: Davila, Eduardo; Hebert, Benjamin
• 署名单位: Yale University; National Bureau of Economic Research; Stanford University
• 刊物名称: REVIEW OF ECONOMIC STUDIES
• ISSN/ISSBN: 0034-6527
• DOI: 10.1093/restud/rdac068
• 发表日期: 2023
• 页码: 1893-1933
• 关键词: dynamic capital structure; long-run; income; equilibrium; constraints; INVESTMENT; CONTRACTS; taxes; RISK

摘要

This article studies the optimal design of corporate taxes when firms have private information about future investment opportunities and face financial constraints. A government whose goal is to efficiently raise a given amount of revenue from its corporate sector should attempt to tax unconstrained firms, which value resources inside the firm less than financially constrained firms. We show that a corporate payout tax (a tax on dividends and share repurchases) can both separate constrained and unconstrained firms and raise revenue and is therefore optimal. Our quantitative analysis implies that a revenue-neutral switch from profit taxation to payout taxation would increase the overall value of existing firms and new entrants by 7%. This switch could be implemented in the current US tax system by making retained earnings fully deductible.