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The destabilizing effect of company income taxation

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  • Peter A. Schmid

    (Catholic University Eichstätt-Ingolstadt, School of Management, Eichstätt-Ingolstadt, Germany)

Abstract

This paper examines the effects of company income taxation. Therefore, a tax system is implemented in a dynamic, stochastic macroeconomic model with endogenous financial structure. In addition to the long-term level effects that are in line with the deterministic public economics literature, cyclical effects are identified. Besides insurance incidences, company income taxation implies amplifying effects. Depending on the model’s frictions, the latter can dominate and lead to more volatile business cycles.

Suggested Citation

  • Peter A. Schmid, 2013. "The destabilizing effect of company income taxation," Society and Economy, Akadémiai Kiadó, Hungary, vol. 35(3), pages 365-388, September.
    • Handle: RePEc:aka:soceco:v:35:y:2013:i:3:p:365-388
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    Cited by:

    1. Burkhard Heer & Alfred Maußner, 2024. "Dynamic General Equilibrium Modeling," Springer Texts in Business and Economics, Springer, edition 3, number 978-3-031-51681-8, June.

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    More about this item

    Keywords

    company income taxation; tax incidences; DSGE modeling; business cycles;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies

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