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Taxation and Incorporation

Author

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  • Keuschnigg, Christian
  • Egger, Peter
  • Winner, Hannes

Abstract

This paper provides a theory of incorporation and taxation that emphasizes the role of the corporate legal form in facilitating access to external capital and the potential advantages of limited liability. Incorporation relaxes financing constraints and makes corporations larger than comparable non-corporate firms. For the same reason, a tax on corporations imposes a smaller first order welfare loss than a tax on non-corporate firms. We study the consequences of tax reform and compare the role of taxation with other institutional reforms.

Suggested Citation

  • Keuschnigg, Christian & Egger, Peter & Winner, Hannes, 2011. "Taxation and Incorporation," VfS Annual Conference 2011 (Frankfurt, Main): The Order of the World Economy - Lessons from the Crisis 48729, Verein für Socialpolitik / German Economic Association.
    • Handle: RePEc:zbw:vfsc11:48729
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    File URL: https://www.econstor.eu/bitstream/10419/48729/1/VfS_2011_pid_422.pdf
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    References listed on IDEAS

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    Cited by:

    1. Christian Keuschnigg, 2010. "Die volkswirtschaftliche Bedeutung des Accounting," University of St. Gallen Department of Economics working paper series 2010 2010-03, Department of Economics, University of St. Gallen.
    2. Stöckl Matthias & Winner Hannes, 2013. "Körperschaftsbesteuerung und Unternehmensverschuldung: Evidenz aus einem Europäischen Firmenpanel / Capital Structure and Corporate Taxation: Empirical Evidence from European Panel Data," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 233(2), pages 188-205, April.

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    More about this item

    Keywords

    Incorporation; corporate tax; external capital; limited liability;
    All these keywords.

    JEL classification:

    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • K34 - Law and Economics - - Other Substantive Areas of Law - - - Tax Law

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