TY  - JOUR
AU  - Sinn,Hans-Werner
TI  - Taxation and the Cost of Capital: The "Old" View, the "New" View and Another View
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 3501
PY  - 1991
Y2  - December 1991
UR  - http://www.nber.org/papers/w3501
L1  - http://www.nber.org/papers/w3501.pdf
N1  - Author contact info:
Hans-Werner Sinn
Ifo Institute -
Leibniz Institute for Economic Research
at University of Munich
Poschingerstr. 5
81679 Munich
GERMANY
Tel: 49-89-21802748
Fax: 49-89-397303;49-89-8506434 (home)
E-Mail: sinn@ifo.de
M1  - published as Hans-Werner Sinn. "Taxation and the Cost of Capital: The "Old" View, the "New" View, and Another View," in David Bradford, editor, "Tax Policy and the Economy, Volume 5" The MIT Press (1991)

AB  - This paper is a critical survey of the recent literature on the tax effects on corporate finance and investment decisions. It corrects a common misinterpretation of the "new" view, emphasizes the cushion effect of financial optimization, dismisses the view that optimizing firms behave as if they maximized their cost of finance, studies the role of immature firms, questions the alleged support of the old view by the occurrence of share repurchases, comments on a potential US budget compromise, and suggests the idea of a Political Miller Equilibrium.
ER  -