One of the most complex areas of the U.S. tax system is the treatment of business financing and investment decisions. Much of the complexity arises because managers try to minimize their firms' tax liability through tax planning. As the authors of this volume point out, these tax planning strategies could differ substantially if the United States undertakes fundamental tax reform. In this analysis of the consequences of proposed tax reforms, the authors describe how such reforms would affect corporate financial policy and summarize economists' knowledge of the magnitude of those effects.

Fundamental Tax Reform and Corporate Finance is one in a series of new AEI studies on topics relating to fundamental tax reform. These topics include the effect of taxation on household saving, the effects of reducing taxes on individuals' work effort, issues in the taxation of financial services, and international issues in consumption, among others.

R. Glenn Hubbard is a visiting scholar at AEI and the Russell L. Carson Professor of Economics and Finance at Columbia University. William M. Gentry is an assistant professor of economics and finance at the Graduate School of Business at Columbia University.