Neutrality-based effective tax rates

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Dokumentart: WorkingPaper
Date: 2002
Source: Tübinger Diskussionsbeiträge der Wirtschaftswissenschaftlichen Fakultät ; 249
Language: English
Faculty: 6 Wirtschafts- und Sozialwissenschaftliche Fakultät
Department: Wirtschaftswissenschaften
DDC Classifikation: 330 - Economics
Keywords: Steuersatz , Investition
Other Keywords:
Effective Tax Rate , Neutral Tax System , Tax Distortion , Investment
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Effective tax rates (ETRs) are designed to indicate the influence of taxes on investments. Existing ETR models fail to generate ETRs that can be compared to a constant yardstick and to other ETRs. This paper develops a new ETR approach based on neutral tax systems. Integration of neutral taxation into the computation of ETRs overcomes the problem of traditional numerical concepts: Comparison of the new ETR and the statutory tax rate as a constant yardstick reveals preferential or discriminatory taxation of investments. Moreover, the comparison of different ETRs displays which investment is distorted to a higher or lower degree.

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