01922cas a2200241 a 4500 AALejournalIMF020709 230101c9999 xx r poo 0 0eng d 5.00 USD 9781498345200 2663-3493 BD-DhAAL BD-DhAAL International Monetary Fund. Tax Policy, Leverage and Macroeconomic Stability. Washington, D.C. : International Monetary Fund, 2016. 1 online resource (77 pages) Policy Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students Risks to macroeconomic stability posed by excessive private leverage are significantly amplified by tax distortions. 'Debt bias' (tax provisions favoring finance by debt rather than equity) has increased leverage in both the household and corporate sectors, and is now widely recognized as a significant macroeconomic concern. This paper presents new evidence of the extent of debt bias, including estimates for banks and non-bank financial institutions both before and after the global financial crisis. It presents policy options to alleviate debt bias, and assesses their effectiveness. The paper finds that thin capitalization rules restricting interest deductibility have only partially been able to address debt bias, but that an allowance for corporate equity has generally proved effective. The paper concludes that debt bias should feature prominently in countries' tax reform plans in the coming years. Mode of access: Internet Policy Papers; Policy Paper ; No. 2016/070 Full text available on IMF http://elibrary.imf.org/view/journals/007/2016/070/007.2016.issue-070-en.xml IMF e-Library