Progressive Taxation and Corporate Liquidation: Analysis and Policy Implications

Elettra Agliardi and Rossella Agliardi ()
Additional contact information
Rossella Agliardi: University of Bologna

Working Paper series from Rimini Centre for Economic Analysis

Abstract: This paper contributes to the debate on alternative corporate tax schemes, employing a rigorous real option methodology which has never been used to study both liquidation policy and taxation. Different tax systems are considered, according to whether the tax regime is progressive or flat and losses are deductible or not. The critical liquidation threshold is derived as a function of interest expenses, the firmÃ•s driving parameters and the tax rates and taxation brackets. It is shown that only the adoption of a flat tax plan does not interfere with the firm's liquidation policy, while any progressive tax schedule can slow down or speed up the closure policy.

Keywords: Corporate debt; default risk; progressive tax; real options (search for similar items in EconPapers)
JEL-codes: G12 G3 G32 G33 H2 H32 (search for similar items in EconPapers)
Date: 2007-07
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.rcea.org/RePEc/pdf/wp29_07.pdf

Related works:
Journal Article: Progressive taxation and corporate liquidation: Analysis and policy implications (2009)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:rim:rimwps:29_07

Access Statistics for this paper

More papers in Working Paper series from Rimini Centre for Economic Analysis Contact information at EDIRC.
Bibliographic data for series maintained by Marco Savioli ().