Implicit Tax, Tax Incidence, and Pretax Returns

• 成果类型: Article
• 署名作者: Guenther, David A.; Sansing, Richard C.
• 署名单位: University of Oregon; Dartmouth College; Tilburg University
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/TAR-2021-0309
• 发表日期: 2023
• 页码: 201-214
• 关键词: reduce

摘要

We investigate the relation between tax rates and pretax returns by showing how implicit tax, tax incidence, and tax capitalization change in response to a tax rate change. We examine these issues in the context of both financial assets and real investments made by corporations in a competitive equilibrium in which all investments earn the same after-tax rate of return. Results show that the pretax return increases in the statutory tax rate due to an explicit tax rate effect and decreases due to a cost of capital effect; the net effect is ambiguous. In contrast, the implicit tax rate is weakly increasing in the statutory tax rate. We also relate our findings to the empirical literature on the effects of taxes on pretax returns.