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Author: | Fuest, C. Huber, B. Nielsen, S. B. |
Title: | Why is the corporate tax rate lower than the personal tax rate? The role of new firms |
Journal: | Journal of Public Economics
2003 : JAN, VOL. 87:1, p. 157-174 |
Index terms: | Capital taxation Capital income tax Tax policy Asymmetric information |
Freeterms: | Start-up firms |
Language: | eng |
Abstract: | The authors argue that a reduction of the corporate tax rate below the personal tax rate is an optimal tax policy if there are problems of asymmetric information between investors and firms in the capital market. The reduction of the corporate tax rate below the personal tax rate encourags equity financing and thus mitigates the excessive use of debt financing induced by asymmetric information. |
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