Company Income Tax and Business Investment. (21st May 2022)

• Record Type: Journal Article
• Authors: Freebairn, John
• Is Part Of: Australian economic review. Volume 55:Number 3(2022)
• Page Start: 346
• Page End: 360
• Publication Date: 2022-05-21
• Subjects: Economics -- Periodicals; Australia -- Economic conditions -- Periodicals; Australia -- Economic policy -- Periodicals; Australia -- Economic conditions -- 1945-; Économie politique -- Périodiques; Australie -- Conditions économiques -- Périodiques; Australie -- Politique économique -- Périodiques; Australie -- Conditions économiques -- 1945- -- Périodiques; 330.994005
• DOI: 10.1111/1467-8462.12473
• Languages: English
• ISSNs: 0004-9018

Abstract

Abstract: There are many financial paths that link different savers who provide funds to different business investors. Path options considered include combinations of corporate and unincorporated businesses, resident and non‐resident savers, debt and equity, and distributed and retained earnings. These different financial paths have different mixes of attributes valuable to savers and investors. As a result, the options are imperfect substitutes. Australian capital income taxation varies across the different financial path options. As a result, effective tax rates and the effects of reforms to company income tax vary across the funding options. Together, the imperfect substitute and different tax treatments reduce the impact of proposed changes in company income taxation on incentives to, and rewards from, business investment.