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dc.contributor.authorBrekke, Kurt R.
dc.contributor.authorPires, Armando José Garcia
dc.contributor.authorSchindler, Dirk
dc.contributor.authorSchjelderup, Guttorm
dc.date.accessioned2014-11-12T12:42:41Z
dc.date.available2014-11-12T12:42:41Z
dc.date.issued2014-11
dc.identifier.issn0804-6824
dc.identifier.urihttp://hdl.handle.net/11250/225799
dc.description.abstractThis paper studies the market and welfare effects of two main tax reforms – the Corporate Business Income Tax (CBIT) and the Allowance for Corporate Equity tax (ACE). Using an imperfect-competition model for a small open economy, it is shown that the well-known neutrality property of ACE does not hold. Both corporate tax regimes distort market entry and equilibrium prices. A main result is that a small open economy should levy a positive source tax on capital in markets with free firm entry. Which tax system is better from a welfare point of view, depends on production technology, the competitive effects of ACE and CBIT, and whether entry is excessive or suboptimal at the given corporate tax rate. Imposing tax income neutrality yields a higher corporate tax rate with ACE, which increases the scope for CBIT to be welfare improving.nb_NO
dc.language.isoengnb_NO
dc.publisherSAMnb_NO
dc.relation.ispartofseriesDiscussion paper;32/14
dc.subjectoptimal corporate taxationnb_NO
dc.subjectcorporate tax reformnb_NO
dc.subjectimperfect competitionnb_NO
dc.subjectACEnb_NO
dc.subjectCBITnb_NO
dc.titleCapital taxation and imperfect competition : ACE vs. CBITnb_NO
dc.typeWorking papernb_NO


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