A Note on Corporate Taxation, Limited Liability and Asymmetric Information

Miglo, Anton (2007) A Note on Corporate Taxation, Limited Liability and Asymmetric Information. Journal of Economics, 92 (1). pp. 11-19. ISSN 0931-8658


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Becker and Fuest (forthcoming) provides a new explanation for the important and puzzling link between limited liability and corporate taxation. The authors argue that a corporate tax on all entrepreneurs with limited liability is optimal when entrepreneurs can offset potential losses and when asymmetric information exists regarding projects' qualities. This note considers a model with slightly modified production technology. It confirms that entrepreneurs' abilities to offset losses and the existence of asymmetric information may affect government policy. However, it also shows that the optimal taxation policy differs from that in Becker and Fuest (forthcoming).

Item Type: Article
Date: 2007
Subjects: L100 Economics
N100 Business studies
N200 Management studies
N300 Finance
Divisions: Faculty of Business, Law and Social Sciences > Birmingham City Business School > Department of Accounting, Finance and Economics
Depositing User: Anton Miglo
Date Deposited: 13 Aug 2018 07:52
Last Modified: 13 Aug 2018 07:52
URI: http://www.open-access.bcu.ac.uk/id/eprint/6211

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