Generalised R-based and S-based taxes under uncertainty

Bond, Stephen and Devereux, Michael (2003) Generalised R-based and S-based taxes under uncertainty. Journal of Public Economics, 87 (5-6). pp. 1291-1311.


This paper considers the relationship between two general neutral business tax structures, which we label the ‘firm tax’ and the ‘shareholder tax’. The well-known R-based and S-based cash flow taxes, analysed by Meade (1978), are special cases of these two taxes. We demonstrate the neutrality of both taxes in the presence of uncertainty, and characterise the tax rules required in the event of default and wind-up. Our analysis provides the first proof of the neutrality of the S-based cash flow tax and the Allowance for Corporate Equity (ACE) corporation tax under uncertainty. We also discuss implementation and tax avoidance issues.

Item Type: Article
Keywords: Neutrality, Cash flow taxes, Uncertainty
Subject(s): Taxation
Centre: Oxford University Centre for Business Taxation
Date Deposited: 01 Dec 2011 12:26
Last Modified: 23 Oct 2015 14:06

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