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Measuring The Impact Of Taxation On Investment And Financing Decisions

Author

Listed:
  • Ulrich Schreiber
  • Christoph Spengel
  • Lothar Lammersen

Abstract

Effective tax rates are a useful tool for policy makers as well as for business managers who might demand condensed but sophisticated information on investment tax burdens. Our paper discusses the measurement of the effective tax rate on profitable investment, i.e., investment that generates an economic rent. Based on an approach presented by Devereux and Griffith, we develop a standard measure of the effective average tax rate. This measure is directly connected with the widely used effective marginal tax rate. The measure uses a comparison with the statutory tax rate to indicate whether or not an investment is tax advantaged.

Suggested Citation

  • Ulrich Schreiber & Christoph Spengel & Lothar Lammersen, 2002. "Measuring The Impact Of Taxation On Investment And Financing Decisions," Schmalenbach Business Review (sbr), LMU Munich School of Management, vol. 54(1), pages 2-23, January.
    • Handle: RePEc:sbr:abstra:v:54:y:2002:i:1:p:2-23
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    More about this item

    JEL classification:

    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • K34 - Law and Economics - - Other Substantive Areas of Law - - - Tax Law
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics

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