The reduction in the firm's tax liability due to the tax deductibility of interest is often referred as a tax shield.

Name: The reduction in the firm's tax liability due to the tax deductibility of interest is often referred as a tax shield.
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This is true. The tax deductibility of interest reduces a firm's taxable income, which lowers the amount of taxes they have to pay. This reduction is commonly referred to as a tax shield.

The Reduction in the Firm's Tax Liability Due to the Tax