This paper derives analytical measures of the combined effects of tax changes and adjustment costs on investment and market value. Unlike earlier measures, the effective tax rate derived is valid in the presence of adjustment costs and anticipated tax changes. The derived measure of the impact...

This paper reviews recent empirical research studying the impact of the U.S. corporate income tax on the behavior of firms. Four areas are discussed:(1) The extent to which dividend taxation imposes a "double tax" on corporate source earnings;(2) The historical impact of tax incentives on the...

Under current U.S. tax law, a distinction is made between gains and losses by businesses. Losses that must be "carried forward" are subject to two penalties: a loss of interest, and expiration after fifteen years. Previous examinations have focused on the higher expected tax payments such a tax...

The U.S. corporate tax distorts the behavior of both real and financial decisions. With respect to the former, the variation in depreciation allowances and investment tax credit provisions across types of investments leads to widely vazying effective tax rates, especially since 1981. Financial...

The cost of capital plays an important role in the allocation of resources among competing uses in a decentralized market system. The purpose of this paper is to organize and present what is known and what is hypothesized about the effects of taxation on the incentive to invest, via the cost of...

The purpose of this paper is to present the chronological development ofthe concept of excess burden and the related study of optimal tax theory. A main objective of this exercise is to uncover the interrelationships among various apparently distinct results, so as to bring out the basic...

This paper begins with a discussion of the measurement of business saving,with the conclusion that even "corrected" measures of business saving are quite inaccurate in the presence of inflation, leading to an overstatement of the recent decline in business saving. The remainder of the paper...

This paper develops a theoretical model of firm behavior consistent with the maximization of shareholder utility, and derives empirically testable implications of different theories of equity finance. Using data on firm earnings and previous investment and financial behavior, we assess whether...

The Economic Recovery Tax Act of 1981 included the largest business tax cut in U.S. history, embodied in the Accelerated Cost Recovery System. This paper describes in detail the provisions of the new treatment of depreciable property ,and analyzes in a fairly nontechnical way its economic...

This paper develops a rigorous theoretical model to assess when investor clienteles may be empirically identified using ex dividend day data and what firm attributes these clienteles should respond to. It then presents empirical results for the period 1963-1977 suggesting that (1) tax-based...