Can Corporate Taxation Be Explained By Limited Liability?
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Authors
Miglo, Anton
Issue Date
2008-12-01
Type
Article
Language
Keywords
Accounting , Business entity taxation , Taxation
Alternative Title
Abstract
Description
We consider a model where wealth-constrained entrepreneurs have private information about the qualities of available investment projects.We show that some "high risk-high return" projects will receive external financing even if they are not socially profitable.Some "low risk-low return" projects will not be funded even if they are socially profitable.Government interventions can improve equilibrium. Optimal government policy may include corporate taxation,subsidies or other instruments.A universal tax on all entrepreneurs with limited liability is not optimal.
Citation
Miglo, A. (2008, December 01). Can Corporate Taxation Be Explained By Limited Liability? Journal of Current Issues in Finance, Business and Economics, 2(4), 1-6.
Publisher
Nova Science Publisher