Tax shield

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Taxation
An aspect of fiscal policy
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Research Academic Mihir A. Desai Dhammika Dharmapala James R. Hines Jr. Ronen Palan Joel Slemrod Gabriel Zucman Advocacy groups Institute on Taxation and Economic Policy (ITEP) Oxfam (UK) Tax Foundation (US) Tax Justice Network (TJN) Tax Policy Center (US)
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A tax shield is the reduction in income taxes that results from taking an allowable deduction from taxable income.^[1] For example, because interest on debt is a tax-deductible expense, taking on debt creates a tax shield.^[1] Since a tax shield is a way to save cash flows, it increases the value of the business, and it is an important aspect of business valuation.