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Business Tax Policy under Default Risk

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  • Comincioli, Nicola
  • Vergalli, Sergio
  • Panteghini, Paolo M.

Abstract

In this article we use a stochastic model with one representative firm to study business tax policy under default risk. We will show that, for a given tax rate, the government has an incentive to reduce (increase) financial instability and default costs if its objective function is welfare (tax revenue).

Suggested Citation

  • Comincioli, Nicola & Vergalli, Sergio & Panteghini, Paolo M., 2019. "Business Tax Policy under Default Risk," ETA: Economic Theory and Applications 291520, Fondazione Eni Enrico Mattei (FEEM).
    • Handle: RePEc:ags:feemth:291520
    DOI: 10.22004/ag.econ.291520
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Research Methods/ Statistical Methods;

    JEL classification:

    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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