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Wealth Taxes and Firms’ Capital Structures: Credit Supply and Real Effects

Author

Listed:
  • José Luis Peydró
  • Hernán Rincón-Castro
  • Miguel Sarmiento-Paipilla
  • Alejandro Granados
Abstract
We study the financial and real effects of a wealth tax reform in Colombia that included a large share of small and medium-sized enterprises (SMEs) as new taxpayers. The tax was introduced in response to a severe weather shock that affected several regions of the country. We use a unique administrative dataset consisting of business loans from the credit registry, matched with balance sheet data and tax reports from both banks and non-financial firms. We identify a concentration of firms around the new tax threshold confirming anticipation of the tax by some affected firms. The new taxpayer firms exhibit tighter credit conditions compared to non-taxpayers firms. Those firms that anticipated the tax and those with ex-ante higher leverage show even tighter credit conditions. The reallocation of credit is higher among banks with high tax contributions. The tax reform also affected the allocation of trade credit among new taxpayers. Affected firms exhibit substantial negative real effects on investment, productivity, and employment. Our results indicate that taxing the wealth of SMEs affects their capital structure and real activity. *****RESUMEN: Estudiamos los efectos financieros y reales de una reforma del impuesto al patrimonio en Colombia que incluyó a una gran proporción de pequeñas y medianas empresas (PYME) como nuevos contribuyentes. El impuesto se introdujo en respuesta a un grave fenómeno climático que afectó a varias regiones del país. Utilizamos un conjunto único de datos administrativos que consiste en préstamos, emparejados con información de sus estados financieros y tributaria, tanto de los bancos como de las empresas. Identificamos una concentración de empresas en torno al nuevo umbral impositivo, lo que confirma la anticipación del impuesto por parte de algunas de las empresas afectadas por el impuesto. Las nuevas empresas contribuyentes presentan condiciones crediticias más restrictivas en comparación con las empresas no contribuyentes. Las empresas que anticiparon el impuesto y aquellas con un mayor apalancamiento ex ante muestran condiciones crediticias aún más restrictivas. La reasignación del crédito es mayor entre los bancos con altas contribuciones fiscales. La reforma tributaria también afectó la asignación del crédito comercial entre las nuevas empresas contribuyentes. Las empresas afectadas por el nuevo impuesto revelan efectos reales negativos sustanciales sobre la inversión, la productividad y el empleo. Nuestros resultados indican que gravar el patrimonio de las PYME afecta su estructura de capital y su actividad real.

Suggested Citation

  • José Luis Peydró & Hernán Rincón-Castro & Miguel Sarmiento-Paipilla & Alejandro Granados, 2025. "Wealth Taxes and Firms’ Capital Structures: Credit Supply and Real Effects," Borradores de Economia 1316, Banco de la Republica de Colombia.
    • Handle: RePEc:bdr:borrec:1316
    DOI: 10.32468/be.1316
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    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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