Other Tax Models That Alleviate the Burden on Equity Financed Investments: Analysis of the Full Integration Tax System, the Dividend Exemption Tax System and the Flat Tax Rate System
Keywords:
Full Integration Tax system (FIT), Dividend Exemption Tax system (DET), Flat Tax Rate system (FTR), cost of capital, effective marginal tax rate, Classical Corporation Tax (CCT), debt, new equity issues, double taxation.Abstract
In our previous articles, we have explained the distortions from the isolated implementation of corporate taxes on company’s investment, a condition that assumes total abstraction of the personal taxes. In this article, we included the personal taxes in our analysis, with intention to explore the investment decision from the shareholder’s point of view as well. With other words, the goal of this serial of articles is to analyze the effects from the integrated implementation of both, the corporate and the personal taxes, a phenomenon commonly referred as “double taxation”. For that purpose, our basic methodology of effective marginal tax rates is once again modified and extended to express all the newly occurred conditions. The theory refers to many varieties of integrated tax systems that carry some capacities to alleviate the burden targeted exclusively on the external equity investments.From the wide literature, in our two previous articles we narrowed our choice to examine the proposals of the OECD, which included the Comprehensive Business Income Tax system (CBIT), the Allowance for Corporate Equity Tax system (ACE), and the Allowance for Shareholder Equity Tax system (ASE). In this article, we focus our attention specifically on the Full Integration Tax system (FIT), the Dividend Exemption Tax system (DET) and the Flat Tax Rate system (FTR).
References
. M. P. Devereux, R. Griffith. The taxation of discrete investment choices. The institute of fiscal studies, Warwick University, 1999;
. M. P. Devereux, R. Griffith, A. Klemm. „Corporate Income Tax Reforms and International Tax Competition“. Economic Policy publications, no. 35, 2002;
. M. P. Devereux, R. Griffith. Evaluating tax policy for location decisions. International Tax and Public Finance, 2003;
. A. C. Harberger. “The Incidence of the corporation income tax”. Journal of Political Economy, University of Chicago press, 1962, 215-240;
. S. Kari, J. Yla-Liedenpohja. „Classical corporation tax as a global means of tax harmonization.” CESifo working paper, Munich, 2002, p1;
. M. P. Devereux, R. Griffith. The taxation of discrete investment choices, The institute of fiscal studies, Warwick University, 1999, p. 49;
. I. Gruevski. „Corporate taxes and their potential effects on investments”. Economic Development, Skopje, 2013, p. 154;
. S. Kari, J. Yla-Liedenpohja. „Classical corporation tax as a global means of tax harmonization“. CESifo working paper, Munich, 2002;
. S. Cnossen. Company taxes in the European Union: criteria and options for reform, An OECD Fiscal Studies, Paris, 1996.
. B. Brys, C. Heady. Fundamental reform of corporate income tax in OECD countries. A tax policy study, Paris, 2007;
. OECD. Fundamental corporate tax reform. A tax policy study, Paris, 2007;
. Corporate Income Tax Code of the RM;
. W. Leibfritz, J. Thornton, A. Bibbie. Taxation and economic performance. An OECD study, 1997;
. Ministry of finance of the RM;
. OECD. Recent tax policy trends and reforms in OECD countries. A tax policy study, Paris, 2004;
. Personal Income Tax Code of the RM.
Downloads
Published
How to Cite
Issue
Section
License
Authors who submit papers with this journal agree to the following terms.
