اصلاح مالیاتی سرمایه، امور مالی شرکت ها و رشد اقتصادی و رفاه

Recent empirical studies have revealed a strong impact of tax changes on corporate finance. Yet, models of economic growth usually neglect financial structure of the representative firm. In order to investigate whether the consideration of firm finance modifies the estimated outcome of capital tax reforms, a corporate sector is introduced in three popular models of economic growth. The paper explores analytically the impact of taxation on structures of finance and production and gives a quantitative reassessment of growth and welfare effects of tax reforms in the U.S. economy. A general result is that standard models of exogenous and endogenous growth overestimate the growth effect and underestimate the welfare gain from tax reform.

Many empirical studies and calibration exercises find that a capital tax reform has only a small effect on the long-run growth rate of an economy. But it may have strong effects on investment—or more generally on factor allocation—and therewith on the level of the growth path and on welfare. Recent microeconometric studies have also found robust support for Modigliani and Miller's (1963) proposition that corporate taxation favors debt finance while personal taxation favors equity finance. Since financial decisions of firms are usually neglected in models of economic growth, the question occurs whether the consideration of corporate finance modifies the estimated investment, growth, and welfare effects of tax reforms.1 In order to answer this question the paper combines two strands of literature: studies on welfare effects of taxation in models of economic growth (which so far do not explicitly consider a corporate sector and the possibility of debt financing) and studies on taxation and corporate finance in general equilibrium models (which so far do not consider the calculation of welfare effects of tax reform). The introduction of a corporate sector in a general equilibrium framework is built upon work by Turnovsky 1982 and Turnovsky 1990, Sinn (1987), and Osterberg (1989). The studies by Turnovsky and Sinn, however, are concerned with a corner solution for the debt ratio (which is one, zero, or an institutionally determined maximum value). Since this prevents a calibration of the model with actual data and thereby a quantitative assessment of growth and welfare effects, I follow Osterberg and employ a cost of leverage function that generates an endogenously explained interior solution for the debt ratio.2 The following section introduces a corporate sector in a dynamic general equilibrium model, which contains the special cases of exogenous growth, one-sector endogenous growth and two-sector endogenous growth. Section 3 discusses the exogenous growth model, obtains general correlations between interest rates and leverage and between leverage and the structure of production, and derives a rule for optimal dividend payouts. Section 4 calibrates the model with U.S. data and provides a quantitative assessment of welfare effects of tax reforms.3 Parameters of the cost of leverage function are found for which the model approximates the finding of Gordon and Lee (2001): a one percentage point increase in corporate taxes raises the average firm's debt asset ratio by 0.4 percentage points. The results are compared with the ones obtained in an otherwise identical economy that neglects adjustment of corporate finance. 5 and 6 discuss the one-sector growth model (where new human capital is produced by investing goods) and the two-sector growth model (where new human capital is produced by investing time) considering explicitly a corporate sector and endogenous finance.4 In both cases a corporate tax reform has a smaller impact on investment and long-run growth and (due to a smaller negative transitional effect) a larger impact on welfare than suggested by the corresponding standard models. Approximately, considering corporate finance reduces the growth effect and enlarges the welfare effect by between 30 and 50 percent each. With respect to private capital tax reductions, an additional effect occurs which is unobtainable from the standard model and which has a mild positive consequence on long-run growth but negative welfare implications.

This paper has introduced a corporate sector and a general cost function of debt finance in a general equilibrium framework and has derived an interior solution for the optimal debt ratio. The main results about the consequences of capital taxation on the structure of finance and the structure of production obtained in preceding studies at the corner solution have been confirmed for the interior solution, and a path of optimal dividend payouts has been derived. Establishing an interior solution has permitted a calibration of the model with data from a recent study on corporate finance and taxation. The representative firm has been placed as an average U.S. firm in three popular models of economic growth. Consequences of capital tax reforms on investment, employment, consumption, growth, and welfare have been calculated and confronted with the corresponding results in standard models without explicit formulation of a corporate sector and endogenous finance. For an interpretation of welfare effects it may be helpful to recall that a one percent welfare gain (originating from replacing all taxes on capital income with increasing tax rates on labor income) has been regarded as the largest free lunch quantitative welfare economics can provide (Lucas, 1990). This paper has found a welfare gain of about half a percent for a corporate tax reduction of 10 percentage points, and it has argued that standard models overestimate the effect of a reform on investment because they neglect adjustment of corporate finance. Since this is true both on impact and in the long run, standard models overestimate the long run growth effect as well as negative transitional implications of tax reforms. Thereby they assess the welfare gain between 30 and 50 percent lower than corporate finance models suggest. Although the particular speed of adjustment may differ, these results apply independently of whether long-run growth is exogenously given or endogenously explained in a one- or two-sector growth model. In this sense the paper confirms and amplifies the superneutrality conjecture of tax policy (Mendoza et al., 1997): consideration of corporate finance lowers the expected growth effect from tax reform and enlarges the resulting welfare gain.