2009年-IMF国际货币组织全球_Debt_Bias_and_Other_Distortions_Crisis_40页_654kb

Summary of "Debt Bias and Other Distortions: Crisis-Related Issues in Tax Policy"

Core Content

This document, prepared by the IMF Fiscal Affairs Department and approved by Carlo Cottarelli, examines how tax distortions contributed to financial market instability during the crisis. It highlights the role of corporate and personal tax policies in encouraging excessive leveraging, the development of complex financial instruments, and the impact on housing and asset prices. The paper argues for structural tax reforms to address these distortions and improve financial stability.

Main Points

1. Debt Bias in Corporate Taxation

• Tax Incentives for Debt: Corporate tax systems typically allow interest deductions but not returns on equity, creating a bias toward debt financing.
• Impact on Leverage: This tax bias leads to higher debt-equity ratios, increasing financial vulnerabilities.
• Empirical Evidence: Studies show that tax distortions significantly raise leverage. For example, a 10 percentage point increase in the CIT rate may increase the debt-asset ratio by 1.4 to 4.6 percentage points.
• Subsidy to Debt: The tax system can result in a marginal subsidy to debt financing, measured in hundreds of basis points, due to the combination of interest deductibility and depreciation allowances.

2. Housing Market Distortions

• Tax Treatment of Housing: Favorable tax treatment of housing—such as mortgage interest relief—has supported high housing prices and increased household leverage.
• Risks of Distortion: These distortions risk financial stability, especially in markets where housing is central to the financial system.
• Need for Neutrality: The paper advocates for more neutral taxation of housing to reduce distortions and align with efficiency and equity principles.

3. Complexity and Low-Tax Jurisdictions

• Financial Innovation: The development of complex financial instruments (e.g., securitization, hybrids) is partly driven by tax distortions.
• Hybrid Instruments: These instruments, such as convertible bonds and trust preferred securities (TruPS), blur the line between debt and equity and are used to gain tax benefits.
• Low-Tax Jurisdictions: The use of low-tax jurisdictions for financial structuring is a response to tax distortions and increases opacity in financial arrangements.

4. Taxation and Asset Prices

• Effect on Asset Prices: Tax policies can influence asset price dynamics, but are not the best way to address financial bubbles.
• Distortions in Capital Gains: Low effective capital gains tax rates (CGT) and deferral of taxation encourage the appreciation of share prices and reduce the attractiveness of retained earnings.

5. Tax and Risk-Taking

• Executive Compensation: Taxation of executive compensation may influence risk-taking behavior.
• Policy Implications: Tax systems that favor debt can lead to excessive risk-taking by firms and financial institutions.

6. International Tax Considerations

• Tax Arbitrage: Divergences in tax rates and bases across countries create opportunities for international tax arbitrage.
• Tax Havens: While progress has been made on tax havens, the issue of tax avoidance remains unresolved.
• Global Coordination: A lack of coordination in tax policies across countries can exacerbate financial instability and distortions.

Key Information

Tax Distortions in Corporate Finance

• Debt Bias: The bias toward debt financing is pervasive and often unjustified in terms of financial stability.
• Tax Neutral Reform: The paper suggests that moving toward tax neutrality in corporate finance is essential for long-term stability.
• Policy Options:
  • CBIT (Comprehensive Business Income Tax): Eliminates interest deductibility while retaining depreciation.
  • ACE (Allowance for Corporate Equity): Allows a deduction for a notional return on equity, reducing debt bias.
  • Cash Flow Taxes: Tax net distributions to shareholders rather than interest, leading to a neutral tax system.

Empirical Evidence

• Debt-Asset Ratios: The required post-CIT rates of return for debt financing are significantly lower than for equity or retained earnings.
• Country Examples:
  • In the U.S., debt financing required only 65% of the interest rate in 2008, compared to 76.5% for new equity.
  • In France, debt received a 36% subsidy, while equity was taxed at 20%.
• Deadweight Loss: Tax distortions are estimated to cause a deadweight loss of 0.05 to 0.15% of invested capital.

Policy Implications

• Structural Reforms: There is a strong case for more decisive action on long-standing tax distortions.
• Sequencing: Some reforms may worsen the immediate outlook, but the current crisis may provide a favorable context for structural changes.
• Neutrality as Benchmark: Neutrality in tax treatment of financial arrangements remains a key policy benchmark.

Conclusion

The paper concludes that tax distortions, particularly the bias toward debt financing, played a significant role in the financial crisis by increasing leverage and encouraging the development of complex financial structures. It recommends moving toward more neutral tax systems, exploring reforms such as CBIT and ACE, and addressing international tax arbitrage to enhance financial stability and reduce inefficiencies.