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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. pp. 162-164. ISSN 0165-1765

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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
Faculty of Social Sciences > Economics, Department of
SWORD Depositor: Elements
Depositing User: Elements
Date Deposited: 17 Jun 2016 14:25
Last Modified: 15 Jan 2022 00:19

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