Asymmetric taxes

Asymmetric taxes

When participants in a transaction have different net tax rates.

Asymmetric Taxes

A situation in which two parties to a transaction pay different tax rates. This may affect what one party or the other desires about the timing, price, or other factors regarding the transaction.
References in periodicals archive ?
The tax system offers insurance for taking risk because taxes depend on outcomes; however, asymmetric taxes on different outcomes, such as progressive rates, may discourage risk taking.
This provides a benchmark for the effects of agency costs and asymmetric taxes.
As shown by Green and Talmor |10~, the effect of asymmetric taxes on investments and firm value will depend on whether or not the tax shields exceed the promised payments to the bondholder.
The second term captures the additional effect of asymmetric taxes.
We have already discussed how asymmetric taxes tend to mitigate the JI firm's asset substitution problem.
Since our primary concern is with the optimal corporate form, our ensuing analysis combines the investment distorting effects of asymmetric taxes and of risky debt.
This article elaborates upon the intuition underlying Doherty and Garven's (1986) option pricing model and extends its basic results to a further consideration of the implications of limited liability and asymmetric taxes for pricing and risk incentives in property-liability insurance.
The third section analyzes the incentive implications of limited liability and asymmetric taxes for stock and mutual organizations.
Pricing Implications of Limited Liability and Asymmetric Taxes
Consequently, the application of the option pricing framework makes it possible to develop a "risk-incentive" hypothesis which suggests that limited liability and asymmetric taxes provide mutuals with greater disincentives for riskbearing than stock companies.
In the discussion that follows, the risk incentive hypothesis is developed from a thorough consideration of the incentive implications of limited liability and asymmetric taxes for mutual and stock insurers.
However, asymmetric taxes modify these incentives rather substantially.

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