demonstrates the neutrality properties of the reform with respect to investment, firm financial decisions and organizational choice …. Tax rates are chosen to prevent income shifting from labor to capital income. The reform decisively strengthens investment …

In the absence of financing frictions, profit taxes reduce investment by their effect on the user cost of capital. With … finance constraints due to moral hazard, investment becomes sensitive to cash-flow and own equity of firms. We propose a … corporate finance model of investment and derive three central results: (i) Even small taxes impose first order welfare losses …

, progressive taxation as well as investment and output subsidies to the entrepreneurial sector. …

investment of small entrepreneurial and larger managerial firms in different financial regimes that are largely in line with …