Seminar
Research seminar: Estimating the tax elasticity of firm debt: What can we learn from bunching?
- Speaker
- Martin Andresen (SSB), Lars Thorvaldsen (UiO)
- Date
- 10 June 2021
- When
- 11:45 - 12:45
- Where
- TEAMS
Content
Estimating the tax elasticity of firm debt: What can we learn from bunching?
Martin Andresen (SSB), Lars Thorvaldsen (UiO)
Lenke til seminaret: Klikk her for å bli med på møtet
Abstract: We exploit the introduction of a thin capitalization rule and access to rich panel data in Norway to estimate the tax elasticity of corporate debt. The new regulation leads to a significant increase in firms' tax liability above the threshold of net interest costs, and firms in the vicinity of these thresholds are incentivized to bunch at the cutoff. We build a model to relate the observed excessive mass at the threshold to the underlying structural elasticity, and estimate an elasticity of debt to the effective net-of-tax of 1.44.