The Effect of Dividend Tax Relief on Investment Incentives

1 September 2003

journal article
Published by University of Chicago Press in National Tax Journal

Vol. 56 (3) , 629-651
https://doi.org/10.17310/ntj.2003.3.12

Abstract

Reducing the double tax on corporate income has an ambiguous effect on marginal effective tax rates. It depends on the specifics of the policy, the extent of debt finance, whether one adopts the new or the old view of dividend taxes, the identity of the marginal investor, the importance of international capital flows, and the replacement tax regime. We illustrate or discuss each of these sources of ambiguity. We also model the excludable dividend amount (EDA), a feature of the President’s dividend tax proposal, and we calculate the marginal effective tax rate for the 5/15 dividend and capital gains tax relief proposal that has become law. Carroll, Robert, Hassett, Kevin A., and Mackie, James B. III (2003), The Effect of Dividend Tax Relief on Investment Incentives , National Tax Journal, 56:3, pp. 629-51 DOI: dx.doi.org/10.17310/ntj.2003.3.12

Keywords

This publication has 1 reference indexed in Scilit:

INTERNATIONAL ASPECTS OF CORPORATE TAX INTEGRATION: THE CONTRASTING ROLE OF DEBT AND EQUITY FLOWS
National Tax Journal, 1994