TITLE:
Corporate Deductibility Provisions and Financial Constraints of Innovative Entrepreneurs
AUTHORS:
Wolfgang Eggert, Sebastian Heitzmann
KEYWORDS:
Allowance for Corporate Equity, Corporate Income Tax Systems, Entrepre-neurship, Finance, Public Policy
JOURNAL NAME:
Theoretical Economics Letters,
Vol.7 No.6,
September
14,
2017
ABSTRACT: Corporate income tax systems around the world
typically favor debt over equity in the tax base definition. The resulting
distortions on financing and investment decisions of corporations are well
documented in the existing literature. In this paper, we focus on the ACE
proposal by the Mirrlees Review [1]. It is shown that an ACE, which mitigates the unequal treatment of
returns to owned and borrowed capital, fosters innovation by financing
startups.