Effective from 2008, Germanyś top marginal income tax rate rises from 42 to 45 der cent. However, sole proprietorships and partnerships can opt for a preferential tax rate of 28,25 per cent for retained profits (§34a EStG-E). If they do so, profits are taxed again upon distribution. Using...

The effects of corporate taxation on firm behavior have been extensively discussed in the neoclassical model of firm behavior which abstracts from agency problems. As emphasized by the corporate governance literature, corporate investment behavior is however crucially influenced by diverging...

The German "Zinsschranke" limits the tax deductability of interest expenses. Recently, in this journal Förster et al. have developed a model to incorporate this tax regulation into the calculation of the tax shield in corporate valuation. Our paper critically comments on this proposal. --...