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Business and Economics > Corporate Taxation

You are looking at 1 - 4 of 4 items for :

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Cover IMF Working Papers
Taxation, Bank Leverage, and Financial Crises
Ruud A. de Mooij
,
Mr. Michael Keen
, and
Mr. Masanori Orihara
That most corporate tax systems favor debt over equity finance is now widely recognized as, potentially, amplifying risks to financial stability. This paper makes a first attempt to explore, empirically, the link between this tax bias and the probability of financial crisis. It finds that greater tax bias is associated with significantly higher aggregate bank leverage, and that this in turn is associated with a significantly greater chance of crisis. The implication is that tax bias makes crises much more likely, and, conversely, that the welfare gains from policies to alleviate it can be substantial—far greater than previous studies, which have ignored financial stability considerations, suggest.
Keywords:
WP; leverage; bank; bank leverage; rate; Bank taxation; corporate tax; debt bias; leverage ratio; bank assets; bank loss; bank characteristic; bank leverage ratio; Corporate income tax; Bank levy; Banking crises
Cover IMF Working Papers
Taxation and Leverage in International Banking
Ms. Grace Weishi Gu
,
Ruud A. de Mooij
, and
Mr. Tigran Poghosyan
This paper explores how corporate taxes affect the financial structure of multinational banks. Guided by a simple theory of optimal capital structure it tests (i) whether corporate taxes induce subsidiary banks to raise their debt-asset ratio in light of the traditional debt bias; and (ii) whether international corporate tax differentials vis-a-vis foreign subsidiary banks affect the intra-bank capital structure through international debt shifting. Using a novel subsidiary-level dataset for 558 commercial bank subsidiaries of the 86 largest multinational banks in the world, we find that taxes matter significantly, through both the traditional debt bias channel and the international debt shifting that is due to the international tax differentials. The latter channel is more robust and tends to be quantitatively more important. Our results imply that taxation causes significant international debt spillovers through multinational banks, which has potentially important implications for tax policy.
Keywords:
WP; short-term debt; tax credit; debt ratio; banking sector; parent bank; Bank taxation; corporate tax; debt bias; leverage; subsidiary bank; tax difference; capital requirement; bank leverage; Corporate income tax; Deposit insurance; Tax allowances; Global
Cover IMF Staff Country Reports
Germany: 2011 Article IV Consultation: Staff Report; Public Information Notice on the Executive Board Discussion; and Statement by the Executive Director for Germany
International Monetary Fund
Germany’s economic growth and recovery from the global crisis are explained in this study. Tax, education, and innovation policies are specific measures supported by the authorities. External and financial shocks received by Germany and other outward spillovers are outlined. Germany has a high current account and international assets. From a long-term perspective, rebalancing of public finances to promote growth is desirable. Stress tests are conducted to confirm the capital buffers. Finally, the banking system of Germany reflects significant policy measures and economic recovery.
Keywords:
ISCR; CR; financing; authority; Three-Pillar banking system; demand; Rebounding export market share; government finance; deposit guarantee schemes regime; current account; financial system; consumption-savings proportion; budget consolidation in Germany; Commercial banks; Cooperative banks; Global; Europe
Cover IMF Staff Country Reports
Eastern Caribbean Currency Union: Selected Issues
International Monetary Fund
This paper assesses the evolution of Eastern Caribbean Currency Union (ECCU) real exchange rates over time, and examines whether the region has lost competitiveness. The main finding is that there is little evidence of overvaluation of the Eastern Caribbean (EC) dollar. The relationship summarized above permits the calculation of equilibrium current account balances or norms. The financing of ECCU current account imbalances appears stable. This paper also provides evidence on the distinctive impact that tourism plays in the determination of the real exchange rate in tourism-driven economies.
Keywords:
ISCR; CR; ECCU; exchange rate; tax; liquidity assistance; tourism flow; CIT rate; banking crisis; ECCU emigration rate; Real exchange rates; Corporate income tax; Liquidity; Tourism; Banking crises; Caribbean; Global