A Superior Hybrid Cash-Flow Taxon Corporations

May 1, 2006

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Format: Chicago

Howell H Zee. A Superior Hybrid Cash-Flow Taxon Corporations, (USA: International Monetary Fund, 2006) accessed November 12, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper proposes a new hybrid cash-flow tax on corporations that, on one hand, taxes only excess corporate profits as they accrue, and, on the other hand, treats real and financial transactions neutrally. It is, therefore, a superior tax compared to the cash-flow tax on real transactions that seems to have gained common acceptance. The hybrid tax is a modified version of the cash-flow tax on real and financial transactions combined. The modification involves replacing expensing of fixed assets with normal depreciation allowances, but the undepreciated value of fixed assets is carried forward with interest at the opportunity cost of equity capital.

Subject: Anti-money laundering and combating the financing of terrorism (AML/CFT), Corporate income tax, Crime, Currencies, Depreciation, Money, National accounts, Tax allowances, Taxes

Keywords: Anti-money laundering and combating the financing of terrorism (AML/CFT), Cash flow, Cash inflow, Cash-flow tax, Corporate income tax, Currencies, Depreciation, Equity capital, Modified S-CFT, Proceeds, Tax allowances, Tax burden, Tax calculation, Tax deferral, Tax depreciation, Tax implication, Tax liability, Tax payment, Tax reform, WP

Publication Details

Pages:

25
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2006/117
Stock No:

WPIEA2006117
ISBN:

9781451863772
ISSN:

1018-5941

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