Generalised R-based and S-based taxes under uncertainty

Stephen Bond () and Michael Devereux
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Stephen Bond: Institute for Fiscal Studies and Nuffield College, Oxford

No W99/09, IFS Working Papers from Institute for Fiscal Studies

Abstract: This paper considers the relationship between two general neutral business tax structures, which we label the ?irm tax' and the ?hareholder tax? The well-known R-based and S-based cash flow taxes, analysed by Meade (1978), are special cases of these two taxes. We demonstrate the neutrality of both taxes in the presence of uncertainty, and characterise the tax rules required in the event of default and wind-up. Our analysis provides the first proof of the neutrality of the S-based cash flow tax and the Allowance for Corporate Equity (ACE) corporation tax under uncertainty. We also discuss implementation and tax avoidance issues.

JEL-codes: H25 (search for similar items in EconPapers)
Pages: 29 pp.
Date: 1999-02-01
New Economics Papers: this item is included in nep-pub
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Citations: View citations in EconPapers (7)

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Journal Article: Generalised R-based and S-based taxes under uncertainty (2003)
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Persistent link: https://EconPapers.repec.org/RePEc:ifs:ifsewp:99/09

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