Effects of Corporate Tax On Investment Decisions
Corporate tax is a tax imposed directly on the income or capital of a corporation. It is imposed at the national level in many countries. It may also be imposed at the state level at lower levels of tax jurisdictions. Income subject to taxation in a company is calculated the same way as taxable income for individuals is calculated. Rules for taxing companies may differ according to different tax jurisdictions. Effects of high corporate tax affect private companies more than they affect public companies. Corporate tax has various effects on the decision-making within a company setup. The tax levels within a certain jurisdiction affect the market value of the firm directly. An increase in the rate of corporate tax leads to a decrease in the market value of a corporation. A decrease in the corporate tax rate has the opposite effect on the market value of the firm. A high tax rate is likely to lead to decisions aimed at increasing market value. The following are some of t...