Why is there corporate taxation ? The role of limited liability revisited

Becker J, Fuest C


Zusammenfassung
Most economists reject the idea that corporate taxation should be interpreted as a price for the privilege of limited liability. In this paper, we reconsider this idea and show that limited liability can lead to overinvestment if information is incomplete. In this setting, introducing an additional tax on limited liability contracts is welfare-enhancing. Our model thus offers an explanation for the nexus between double taxation and limited liability observed in many existing tax systems.

Schlüsselwörter
corporate taxation limited liability



Publikationstyp
Aufsatz (Zeitschrift)

Publikationsstatus
Veröffentlicht

Jahr
2007

Fachzeitschrift
JOURNAL OF ECONOMICS

Band
92

Ausgabe
1

Erste Seite
1

Letzte Seite
10

Seiten
1-10

Sprache
Englisch

ISSN
0931-8658

Affiliierungen
Univ Cologne, Univ Cologne