Taxes matter! Nobody seriously doubts this. Yet many finance textbooks keep entirely quiet about tax issues. It is well-known that investors and enterprises strive to maximize their income net of taxes, yet business schools rarely teach their stu- dents how tax effects impact business decisions. Ignoring tax effects will typically lead to investor decisions that are wrong froma real world lack of stu- dent knowledge also makes fiscal policy more difficult: How can a financial system offer targeted tax incentives given that managers, former business school students, do not know how to rationally incorporate them into their decisions?.
