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Tax incentives and borrowing

Alan, Sule and Leth-Petersen, Søren and Munk-Nielsen, Anders (2016) 'Tax incentives and borrowing.' Economics Letters, 145. 162 - 164. ISSN 0165-1765

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Abstract

We estimate the effect of the Danish 1987 tax reform, which reduced the tax rate applied to interest deductions from 73% to 50% for households with high incomes, but less for households with middle or low incomes. Using high quality panel data we find that households responded to the reduced tax subsidy by lowering interest payments and we find that the responsiveness to the tax subsidy varies by the initial level of interest payments.

Item Type: Article
Uncontrolled Keywords: Interest rate deduction; Tax reform; Micro data
Subjects: H Social Sciences > HB Economic Theory
H Social Sciences > HJ Public Finance
Divisions: Faculty of Social Sciences > Economics, Department of
Depositing User: Jim Jamieson
Date Deposited: 17 Jun 2016 14:25
Last Modified: 27 Sep 2018 16:15
URI: http://repository.essex.ac.uk/id/eprint/16970

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