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2014
- ISIDORE Id: 10670/1.3512b6...
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Michel Aujean et al., « Financing Investment and Fiscal Neutrality: Risk Capital Deduction in Perspective », Reflets et perspectives de la vie économique, ID : 10670/1.3512b6...
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Résumé
Debt-equity bias has been present in many tax systems for a number of decades. While interest is tax deductible, return on equity is subject to tax at the corporate level and may be taxed again at the personal level. The recent financial and economic crisis has clearly made the point that excessive leverage may be damaging, so there is a renewed interest in the consequences of debt-equity bias. This article sets out the main solutions for debt-equity bias that have been suggested in the economic literature. We present Belgian and Italian reforms: both counties have introduced an Allowance for Corporate Equity (ACE) but the design of the allowance is very different. We describe the two reforms and some elements of assessment, and then draw conclusions on what can be learned from the comparison with regard to the future of ACE in Belgium. JEL: H2, H25, G3
