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Corporate Income Tax Reform in Switzerland

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abstract This paper analyzes the likely economic consequences of a specific proposal for corporate income tax reform in Switzerland that is based on the recent ERU (2001) report. The proposal includes a partial dividend tax relief, more effective taxation of capital gains, and a property tax reduction, all relating to qualified stakes in corporate firms. Based on an analytical and quantitative analysis, we find that the reform removes an important tax barrier against dividend payments, reduces the cost of equity capital, thereby reduces debt leverage and encourages investment in the corporate sector. In stimulating transitional growth towards higher long-run income levels, the reform expands tax bases and thereby becomes considerably less costly in the long-run. A sensitivity analysis shows that the quantitative results are rather robust.
   
type journal paper
   
keywords Tax reform, financial policy, organizational choice, dynamic general equilibrium modeling.
   
language English
kind of paper journal article
date of appearance 15-12-2004
journal Swiss Journal of Economics and Statistics
publisher Peter Lang AG (Bern)
ISSN 0303-9692
volume of journal 140
number of issue 4
page(s) 483-519
review not reviewed
   
citation Keuschnigg, C., & Dietz, M. (2004). Corporate Income Tax Reform in Switzerland. Swiss Journal of Economics and Statistics, 140(4), 483-519.