TY - JOUR
T1 - Is the deadweight actually dead?
T2 - Real option value and taxation of oil and gas
AU - Libson, A.
PY - 2015
Y1 - 2015
N2 - Analysis of tax policy overlooks an important element — the real option value of the tax. If a tax causes a company to defer an activity with a high probability that the activity will occur in the future when its costs are lower, the tax will provide an economic benefit. Taking into account this real option value will have a substantial impact on one of the key issues shaping tax policy — the analysis of the deadweight loss caused by a given tax. This Article will focus on the taxation of oil and gas, an area where real option value is especially relevant. The Article shows that the optimal tax rate on oil and gas should be higher than under conventional analysis. The Article also sheds light on how this observation about the deadweight loss of taxation is connected to two developing strands in legal scholarship: increasing attentiveness to real option value, and incorporation of dynamic economic analysis into legal policy.
AB - Analysis of tax policy overlooks an important element — the real option value of the tax. If a tax causes a company to defer an activity with a high probability that the activity will occur in the future when its costs are lower, the tax will provide an economic benefit. Taking into account this real option value will have a substantial impact on one of the key issues shaping tax policy — the analysis of the deadweight loss caused by a given tax. This Article will focus on the taxation of oil and gas, an area where real option value is especially relevant. The Article shows that the optimal tax rate on oil and gas should be higher than under conventional analysis. The Article also sheds light on how this observation about the deadweight loss of taxation is connected to two developing strands in legal scholarship: increasing attentiveness to real option value, and incorporation of dynamic economic analysis into legal policy.
UR - http://scholar.google.com/scholar?num=3&hl=en&lr=&q=allintitle%3A%20Is%20the%20Deadweight%20Actually%20Dead%3F%20Real%20Option%20Value%20and%20Taxation%20of%20Oil%20and%20Gas%2C%20author%3ALibson%20OR%20author%3AAdi&as_ylo=2015&as_yhi=&btnG=Search&as_vis=0
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VL - 45
SP - 833
EP - 1109
JO - Seton Hall Law Review,
JF - Seton Hall Law Review,
IS - 3
M1 - 3
ER -