| 来源类型 | Article |
| 规范类型 | 评论 |
| The Effect of Dividend Tax Relief on Investment Incentives | |
| Kevin A. Hassett; James B. Mackie; Robert Carroll | |
| 发表日期 | 2003-09-01 |
| 出版年 | 2003 |
| 语种 | 英语 |
| 摘要 | The recent proposal by the Bush Administration to eliminate shareholder-level taxes on dividends and retained earnings revived interest in reducing the double taxation of income earned on corporate equity. The Bush Administration’s proposal ultimately led to enactment of a reduction in the tax rate on dividends and on capital gains, the so-called 5-15 proposal. Reducing the double tax–“integration” in the parlance of public finance economics–has long been advocated as a desirable tax reform, but there is significant uncertainty concerning the size of the economic benefits associated with lower dividend taxes. Modeling dividend tax changes is complex and there is disagreement in the academic literature about the size of integration’s likely effect on the incentive to invest. We illustrate several sources of ambiguity using the Hall-Jorgenson user cost of capital–marginal effective tax rate framework. First, we show that integration’s benefits depend on the extent to which investment is financed with equity rather than with debt. Second, integration’s benefits depend on the extent to which corporate investment is burdened by dividend taxes, as under the “old view” of dividend taxes, rather than by capital gain taxes, as under the “new or trapped equity view” of dividend taxes. Third, integration’s benefits depend on the marginal investor, for example, on whether the marginal investor is a taxable individual or instead is appropriately thought of as an average of all investors, including tax exempt entities such as pension funds. Fourth, integration’s benefits may depend on the extent to which the economy is open to international capital flows. Finally, the benefits of integration may depend on specific firm-level characteristics such as the asset life of a firm’s machines. The Bush Administration’s original proposal for eliminating the double tax on dividends intended to implement the principle that all corporate income should be taxed once. The mechanism for ensuring that corporate income was taxed once was an Excludable Dividend Amount (EDA) that restricted the shareholders’ excludable amount to income that had been previously taxed under the corporation income tax at a 35 percent tax rate. Without such a mechanism, a shareholder exclusion of corporate income could result in a zero tax imposed on income that benefits from corporate tax preferences such as exclusions, deductions, and credits. Previous analyses of the effect of integration on the marginal effective tax rates have not included the effects of an EDA, even though EDAs were a feature of past integration proposals, such as those discussed in U.S. Treasury (1992). In this paper, we modify the traditional user cost framework in order to model the EDA. It turns out that the EDA can have surprising effects on investment incentives, compared to shareholder exclusions that do not incorporate an EDA. As expected, in many cases the EDA raises the tax cost of corporate investment since the benefits of dividend tax reduction can be offset by a reduction in the value of corporate–level tax shields. In other cases, however, the EDA increases marginal investment incentives, even though its intention is to limit tax benefits. In addition, the EDA may not promote tax neutrality to as great an extent as full exclusion without EDAs, which provides more aggregate tax relief to the corporate sector. However, an EDA costs less than a straight exclusion, thus biasing the comparison somewhat in favor of an exclusion without an EDA. Our analysis of EDAs is supported by the rigorous dynamic optimization analysis of EDAs given in Auerbach and Hassett (2003b) and builds on and complements the analyses of Gale and Orszag (2003) and Esenwein and Gravelle (2003). The Double Tax on Corporate Profits: An Overview of Its Effects Current law “double taxes” corporate profits (U.S. Treasury, 1992). This is seen most easily if we assume that the tax code measures and taxes economic income so that statutory tax rates equal marginal effective tax rates. In this case, corporate income is taxed once under the corporation income tax at rate u. It is taxed again under the individual income tax when distributed as a dividend or realized as a capital gain upon sale of shares, say at rate Te. The marginal effective total tax rate on income from an equity financed investment then is u + (1-u)Te, reflecting the sum of the corporate tax rate and the shareholder tax rate. Double taxation potentially distorts a number of economic choices. The double tax adds to the overall tax burden on a typical investment in the U.S. economy, and so may discourage saving and investing in the aggregate. This potentially reduces capital formation and saving and slows economic growth. Because of double taxation, corporate equity financed investments typically are taxed more heavily than similar investments undertaken by pass-through entities such as S corporations, partnerships or sole proprietorships. In addition, the double tax adds to the tax burden on business investment relative to essentially untaxed owner–occupied housing. Consequently, double taxation inefficiently discourages the use of the corporate form of organization or investment in corporations, as well as investment in businesses as opposed to owner-occupied housing. It thus contributes to an unproductive use or allocation of our nation’s stock of real capital. The double tax on corporate equity also may create financial distortions. It might discourage corporations from financing with equity in favor of using debt, on which the company may deduct interest payments, to finance their activities. This may make corporate capital structures too rigid and too vulnerable to bankruptcy and financial distress. In addition, by distinguishing between dividends, taxed as ordinary income, and retained earnings and share repurchases, taxed as capital gains, the personal level tax on corporate earnings may discourage companies from paying dividends. Under some theories of the firms, this may impose additional costs on investors, who receive a smaller fraction of their earnings as dividends than, but for taxes, they would prefer. The effect of double taxation on debt-equity ratios has been recognized to be an important theoretical concern for decades. Remarking on the theory in their famous textbook, Atkinson and Stiglitz compare a classical system like our own to one that integrates corporate and personal taxes (an “imputation” system). They remark that “the switch from a classical system to imputation may make a substantial difference” and equity finance may be much more likely (Atkinson and Stiglitz, 1980, p. 141). Early empirical work failed to find a significant effect of marginal tax rates on finance, but recent studies have been more successful in finding a link. In a recent review article, more recent studies have found that higher marginal tax rates tend to increase debt levels–the effect predicted by theory (Graham, 2003). Studies of taxes and dividend payout have found that there is a significant link. Poterba (1987) found that payout tends to respond sharply to swings in marginal tax rates. To the extent that firms have an incentive to allow cash to pile up within the firm, or to undertake investment projects with negative net present values, these incentives may exacerbate problems of asymmetric information and separation of ownership from control. As these issues are quite difficult to quantify, we focus henceforth on the linkage between dividend taxation and real investment. Recent empirical studies have generally found a significant link between the user cost of capital and real investment, thus dividend tax policy can have a significant impact on the economy if it affects the user cost of capital in a material manner. This paper discusses the effect of integration on the incentives that guide investors in making real investment decisions using a cost of capital/effective tax rate framework. The Traditional Cost of Capital/Marginal Effective Tax Rate Model The Conceptual Framework We analyze the investment incentive effects of integration using a model of investment incentives closely related to the cost of capital approach associated with Mervyn King, Don Fullerton, and their colleagues (e.g., King and Fullerton, 1984; Fullerton, 1987; Mackie, 2002). The conceptual framework is that of the neoclassical theory of investment pioneered by Dale Jorgenson (1963) and Robert Hall and Dale Jorgenson (1967). According to the neoclassical theory of investment, the firm will continue to invest until, at the margin, the after-tax cash flow from the last dollar invested equals $1. So, in equilibrium [1] 1 – k = [integral](1 – u)[ce.sup.-([r.sub.c] – [pi] + [delta])t] + dt + u(1 – k)z, where k is the investment tax credit rate, u is the statutory corporate income tax rate, c is the asset’s pre-tax rental rate, [delta] is the economic depreciation rate, [r.sub.c] is the firm’s nominal after-tax discount rate, [pi] is the inflation rate and z is the present value of tax depreciation allowances on a one dollar investment. Integrating to determine c, and then subtracting [delta] gives the cost of capital, the pre-tax after-depreciation rate of return required to cover the investment’s tax cost and the real after-tax opportunity cost of funds. If we denote by [[rho].sub.c], the cost of capital for a corporate investment, then [2] [[rho].sub.c] = c – [delta] = (1 – k)[[r.sub.c] – [pi] + [delta]](1 – uz) /(1-u) – [delta] The cost of capital is the real rate of return, net of depreciation, that is just sufficient to cover the investment’s tax cost and its real opportunity cost of funds, [r.sub.c] – [pi]. Shareholder Taxes: The Debate between the Old and the New Views of Dividend Taxes Investor level taxes enter through the discount rate, [r.sub.c]. If we assume that shareholders require an after-all-tax real rate of return of s, then the discount rate for an equity financed investment is [3] [r.sub.c] = [r.sub.e] = (s + [pi]) / (1 – Te). Determining the appropriate value for Te reflects the view one takes on the debate between the new view and the old view of dividend taxes (Auerbach, 2001; Auerbach and Hassett, 2003a; Bradford, 1981; King, 1977; Poterba and Summers, 1985; and Zodrow, 1991). Each alternative is based on a theory designed to explain why a firm would pay dividends even though they are taxed more heavily than are capital gains on reinvested earnings or share repurchases. The old view holds that dividends offer a non-tax benefit that offsets their tax disadvantage. Corporations set dividend payments so that, for the last dollar of dividends paid, the extra non-tax benefits of dividends equal their extra tax cost. Under this theory, marginal investment is financed by new share issues, implying that the value of a marginal dollar in the company is one dollar, q = 1. The reason q is always one is that this simple model has no adjustment costs and investment responds quickly to dividend tax payments. For example, if dividend taxes are lowered, the marginal after-tax product of capital increases instantaneously, thereby pushing q above 1. Investment then occurs driving q back to one. The dividend tax raises the effective tax rate to the extent that firms payout current earnings as dividends, while capital gains taxes raise the effective tax rate to the extent that firms retain and reinvest current earnings or distribute earnings to stockholders via share repurchases. Under the old view, Te = Pm + (1-P)[omega], where P is the dividend payout ratio, m is the dividend tax rate and [omega] is the effective accrual tax rate on capital gains, which reduces the statutory tax rate on gain to account for deferral and sometimes for the tax free-step-up in basis at death (King and Fullerton, 1984). [1] Under the new view of dividend taxes, dividends offer no non-tax benefits, but are assumed to be the only means of distributing funds to shareholders. Because dividend taxes must be paid on corporate distributions, they reduce the marginal value of corporate shares, and for this reason the new view is sometimes called the tax capitalization view. Specifically, if the firm is paying dividends, the investor is indifferent between receiving a dividend with an after-tax value of (1 – m) and having the firm reinvest the earnings within the company, thereby raising share value by q, which generates an after-tax capital gain of q(1 – [omega]). So, the increase in the value of the company when it retains a dollar is q = (1 – m) / (1 – [omega]) < 1. Under the new view, because of tax savings for shareholders, firms would generally prefer to finance investment out of retained earnings rather than by issuing new shares. For investment financed by retained earnings, the dividend tax has no effect on the incentive to invest, since it reduces proportionately the investment’s after-tax cost and its after-tax return, leaving the rate of return unaffected. In contrast, the capital gains tax on share appreciation acts as a deterrent to investment financed through retained earnings. Under the new view, Te = [omega]. The empirical support for either view is mixed. Numerous studies show a statistical relationship between the dividend payout ratio and the tax penalty on dividends relative to capital gains, seeming to offer support for the old view. However, the theory of the new view only predicts that dividend taxes are irrelevant when they are constant through time. Since variation of tax rates over time is required if one is to estimate an equation, one cannot form a sharp conclusion about the relevant merit of either view from this evidence. Firms rarely issue new shares, offering some support for the new view. However, marginal investment might still be financed by new shares even if share issues occur infrequently. Some papers have found evidence that some firms may be on the new share issue margin, while others may be on the retained earnings margin, suggesting that each theory may be appropriate for some firms at some times. One piece of evidence against the new view, that share repurchases occur frequently, while the new view assumes that firms must distribute via dividends, is widely interpreted as conclusive proof that the new view is flawed. It is not clear, however, that the ability of firms to distribute via share repurchases invalidates the new view’s implication that the dividend tax does not affect the cost of capital (Auerbach, 1989a and 2001; Auerbach and Hassett, 2003a). If earnings are distributed via share repurchase, then the dividend tax would seem to have no potential to affect investment incentives because dividends are not paid. Furthermore, under new view logic, the tax on distributions, which in this case would be a capital gains tax on repurchases, would be irrelevant, since it affects proportionately both an investment’s cost and its return, leaving the rate of return unaffected. The capital gains tax on share appreciation would continue to burden the investment. Following the U.S. Treasury (1992), we adopt the old view in most calculations, but also test the sensitivity of our results to this assumption by performing an alternative set of calculations under the new view. Auerbach and Hassett (2003a) suggest that about half of firms in the U.S. likely fall under each view, so analyzing the change in investment incentives under each view is important for understanding the impact of any policy. Debt Financed Investment and Taxes on Lenders If a bondholder is taxed at rate [theta], then the firm’s discount rate for a debt financed investment is [4] [r.sub.c] = [r.sub.d] = i(1 – u) = (s + [pi])(1 – u)/(1 – [theta]) which accounts for the firm’s ability to deduct the return paid to bondholders, i.e., interest, and for tax the lender pays on interest income. A Weighted Average Discount Rate For mixed debt and equity financing, the firm’s discount rate, r, is a weighted average of [r.sub.e] and [r.sub.d]. [5] [r.sub.c] = [w.sub.e][r.sub.e] + [w.sub.d][r.sub.d] The appropriate weights, [w.sub.e] and [w.sub.d] are based on the assumed share of the investment that is financed by debt. Under the new view, however, the weights are adjusted to reflect the undervaluation of corporate equity (Auerbach, 1983a).[2] The Marginal Effective Tax Rate The marginal effective tax rate is the proportion of the investment’s pre-tax return that is needed to cover the tax cost. The marginal effective total tax rate includes taxes at the company level and at the investor level and is computed as [6] METTR = ([[rho].sub.c] – s) / [[rho].sub.c]. The METTR can be interpreted as the hypothetical tax rate that, if applied to economic income, would have the same incentive effects as those implied by the actual tax system.[3] The Parameter Assumptions In the calculations presented below, the after-tax required rate of return, s, is set to 4 percent, [4] and the inflation rate to 3 percent. Statutory tax rates reflect federal income taxes only.[6] In most calculations, the tax rates are a weighted average across all investors, [7] including both taxable investors and tax exempt investors, but sensitivity analysis is performed using a higher set of tax rates. In most calculations, financing is assumed to be 35 percent and 65 percent equity, [8] but sensitivity results are presented based on a higher leverage ratio. In calculations based on the old view of dividend taxes, we assume that companies payout 50 percent of their earnings as dividends.[9] In our calculations, we do not alter financial policy in response to changes in taxes. We note in passing that there is little on which to base these assumptions in the existing literature. We really don’t know how marginal investments are financed, nor do we know the tax status of marginal investors, if there is such a thing. Nonetheless, the particular assumption chosen can have a large effect on the results. Some of these issues we deal with through sensitivity calculations, but others we do not address. For example, even seemingly inconsequential assumptions, such as using an average tax rate to compute the user cost, rather than computing an average user cost across different potential tax rates, can affect the results. The Investment Incentive Benefits of Shareholder Exclusions The integration plan proposed by the Bush administration is a modified version of a shareholder exclusion applied to both dividends and future capital gains. To analyze the Bush plan, it appears sensible to move by steps from current law to the full plan. In this section, we begin this by presenting calculations that proceed from current law to a 50 percent dividend exclusion, and then to a 100 percent exclusion of both dividends and capital gains on corporate stock, which would extend the benefits of integration to corporate earnings that are paid out as dividends as well as to those that are retained and reinvested within the company. Two variations of the capital gains exclusion are considered: an explicit exemption and exclusion for dividend reinvestment plans (DRIPs). After considering these shareholder exclusions, the President’s proposal, which as described earlier limits tax relief to the EDA, is examined in the following section. The paper also includes calculations for the 5/15 plan that was enacted during the completion of this paper. Modeling Shareholder Exclusions Shareholder exclusions are modeled by adjusting the shareholder’s tax rate on equity financed corporate investment. With a 50 percent dividend exclusion, Te = P(1/2)m + (1-P)[omega], while with an exclusion of both dividends and capital gains on corporate stock, Te = 0. Determinants of the Incentive Benefits of Shareholder Exclusions The old-view calculations in Table 1 show that under current law, corporate investment faces a substantially higher effective tax rate, 33.5 percent, than does investment in the noncorporate sector, 20.0 percent, and in owner-occupied housing, 3.5 percent.[10] The overall economy wide effective tax rate is 19.1 percent. Integration in the form of either a 50 percent dividend exclusion or a 100 percent exclusion of both dividends and capital gains would potentially offer substantially improved investment incentives.[11] Under the old view, the proposals would reduce the tax burden on corporate investment which would translate into a reduction in the economy wide marginal effective total tax rate of 9 percent and 24 percent, respectively. The lower corporate tax cost also levels the playing field by reducing differences in the taxation of investment across sectors (i.e., the corporate business sector, the noncorporate business sector, and owner-occupied housing). This improved tax neutrality is reflected in the calculations by a reduction in the standard deviation in the cost of capital, [12] compared to current law.[13] Not surprisingly, 100 percent exclusion of both dividends and capital gains does substantially more to reduce effective tax rates and improve tax neutrality than does a 50 percent exclusion of dividends. Debt vs. Equity Financing The investment incentive benefits of integration are sensitive to underlying parameter assumptions. One important assumption is the extent to which corporate investment is financed with debt rather than with equity. With a high debt/ asset ratio, the ability of the company to deduct interest means that a large fraction of corporate investment escapes current law’s double tax on corporate equity, implying that current law does little to discourage corporate investment (Stiglitz, 1973), although the double tax itself may encourage a high degree of leverage if borrowing decisions are affected by taxes. Consequently, because the existing distortion of the double tax is smaller, integration has less potential for improving tax neutrality when corporate investment is largely debt financed than it does when corporate investment is largely equity financed. These effects are illustrated in Table 1 in the calculations labeled high debt, which modify the old view calculations by raising the leverage ratio from 35 percent to 65 percent. With high debt, a 100 percent exclusion would lead to a smaller reduction in the effective tax rate for investment in the corporate sector and to a smaller reduction in the standard deviation in the cost of capital, compared to the old view calculations. Perhaps surprisingly, in the high debt calculations, 100 percent exclusion reverses the existing tax bias against corporate investment; the effective tax rate on corporate investment falls below the effective tax rate on noncorporate business investment. This reversal occurs in part because corporations receive a subsidy on debt financed investment that is much larger than that granted to investment by noncorporate businesses. The subsidy on debt financed investment arises because corporations deduct interest at a tax rate substantially higher than the tax rate generally imposed on interest income (see, e.g., Mackie, 2002). One aspect of this subsidy arises because interest is not indexed for inflation. The corporation can deduct the inflation component of the nominal interest rate, an amount that corresponds to a repayment of principal rather than income, at a higher tax rate than that imposed on interest recipients.[14] In addition, the tax rate differential leads to a tax subsidy for investments entitled to such preferences as accelerated depreciation. The corporation takes tax deductions for such preferences at a tax rate higher than that imposed on the income that the investment earns. Old View vs. New View Another important assumption is that the old view of dividend taxes informs the calculations. Because the capital gains tax rate is smaller than the dividend tax rate, the tax cost of corporate equity financed investment under current law is smaller under the new view than it is under the old view of dividend taxes. In addition, under the new view integration’s reduction in the tax rate on dividends does not reduce the tax cost of corporate investment. Consequently, to the extent that one favors the new view, the benefits of shareholder tax relief would be smaller than under the old view. Nonetheless, the calculations in Table 1 suggest that the investment incentive effects may continue to be substantial as long as tax relief is provided to retained earnings as well as dividends. Even under the new view, shareholder tax relief would reduce the corporate marginal effective total tax rate by over 7 percentage points. In evaluating integration, however, it is important to recall that under the new view a substantial part of the revenue cost of integration goes to providing a windfall benefit to shareholders, in the form of an increase in share values caused by eliminating previously capitalized dividend taxes, rather than to reducing the marginal tax cost of investment in the corporate sector. Without shareholder level taxes, q would rise to one. Even under the old view, windfall benefits to shareholders can occur in the short run if the stock of corporate capital cannot expand immediately to its new equilibrium level. The tax reductions that generate these windfalls raise the revenue cost of providing relief from double-taxation.[15] High Tax Rate Marginal Investor The benefits of integration also depend on the statutory tax rates on capital income that underlie the calculation of the effective tax rates. Statutory tax rates in turn reflect assumptions about the marginal investor, a subject on which there is little agreement in the economics profession (Auerbach, 2001). The tax rates used in the previous calculations are economy wide averages, reflecting the marginal rate on taxable investors as well as a zero rate for tax exempts. In such calculations, all current investors are marginal investors, and are included with weights reflecting their ownership of the existing capital stock. A competing view is that high tax cost investors are the marginal investors. In addition to theoretical arguments that the high cost investor might be the last in, there is a body of empirical work suggesting that the marginal corporate investor might face a high tax rate (e.g., Harris and Kemsley, 1999; Gentry, Kemsley, and Mayer, 2003). This view is reflected in Table 1 by calculations that exclude tax exempts and so include only taxable individual investors in the construction of the statutory tax rates.[16] At the higher statutory tax rates, current law’s tax penalty on corporate investment is considerably greater than it is in the earlier calculations. Moreover, the higher tax penalty is caused by higher shareholder taxes. Consequently, by eliminating shareholder level taxes, integration does much more to reduce the corporate effective tax rate and to improve tax neutrality than it does when lower tax rates underlie the calculations. Exclusion via a DRIP and the Taxation of Inflation Rather than eliminating or reducing the capital gains tax on the sale of corporate shares, the benefits of integration could be extended to retained earnings by allowing (or requiring) companies to have dividend reinvestment plans (DRIPs), or in some other way to adjust the basis of shares in order to eliminate the capital gains tax on share price rises caused by retained earnings.[17] DRIPs were discussed in U.S. Treasury (1992) and a DRIP variant is a feature of the Bush Administration’s dividend tax relief proposal. It is unclear how to account for a DRIP in the model outlined above. Following the basic King-Fulleton approach, adopted by Auerbach (1996), the firm would split the nominal equity return (the real return plus inflation) between dividends and retentions. In such a model, a DRIP might eliminate the tax on the part of the nominal rate of return that is retained and reinvested in the company (or, formally, distributed as a dividend and then reinvested), in the same way that a dividend exclusion eliminates the tax on the part of the nominal return that is distributed as a cash dividend. Yet this treatment would seem to combine a DRIP with inflation indexing of capital gains on stock and would not distinguish between a DRIP and a capital gains exclusion. An alternative modeling strategy assumes the inflation component of the nominal return accrues as an increase in share values. In this approach, the firm divides real earnings, earnings ([r.sub.e] – [pi]), between dividends and retentions and inflation is taxed to the shareholder as a capital gain on the appreciation of his shares. This alternative approach is developed and used in Auerbach (1983a and b), Gravelle (1994), and U.S. Treasury (1992). It allows one to distinguish between a DRIP, capital gains indexing, and a capital gains exclusion while avoiding the seeming inconsistency between the taxation of dividends that are distributed as cash and those that are retained and reinvested. It also seems consistent with the assumption of the cost of capital model outlined above that the firm holds the asset forever. The final column of Table I presents the calculations based on this alternative modeling of the taxation of the inflation return to equity [18] for a combination of a dividend exclusion plus a mandatory DRIP. Calculations for current law [19] and for a 100 percent shareholder exclusion would be unaffected by the change in the modeling of inflation. Under this alternative modeling of inflation, the combination of a dividend exclusion and a DRIP does less to lower the tax cost imposed on income from corporate investment than does a dividend exclusion plus a capital gains exclusion, because the DRIP leaves in place a tax on inflationary increases in asset value. Other Issues The model used to calculate effective tax rates assumes that the U.S. economy is closed to international capital flows. The extent to which capital is internationally mobile is an unsettled issue (Feldstein and Horioka, 1980; and Harberger, 1980), but it is clear that the effects of capital income taxes can be substantially different in an economy open to international capital flows than in an economy closed to such flows. International capital flows break the link between investment in the U.S. and saving by U.S. residents (Slemrod, 1988), and hence break the equivalence between taxes on investment and taxes on saving. One implication is that U.S. personal income taxes may do less to discourage investment in the U.S. economy. A corollary is that U.S. shareholder level taxes may do less to discourage investment in the corporate sector of the U.S. economy, relative to investment in the U.S. non-corporate business sector or in owner-occupied housing, because the double tax does not translate into a higher cost of capital for the U.S. corporate sector. Thus, reducing or eliminating taxes on U.S. shareholders may do little to promote a more efficient allocation of capital within the U.S. Nonetheless, reducing personal taxes may still encourage more saving by U.S. citizens, even when investment incentives for U.S. companies are not affected by taxes on their U.S. shareholders. Analyzing integration in an open economy raises a number of additional issues (U.S. Treasury, 1992; and Grubert and Mutti, 1994) and is beyond the scope of this paper. The calculations reported in Table 1 take no account of replacement taxes; they implicitly assume that nondistorting lump-sum taxes are used to finance any revenue shortfall. By ignoring the distortions that would be caused by real world taxes that are needed to make-up the lost revenue, the calculations overstate any implied benefits to the economy for integration. This overstatement is larger, the larger is the tax cut afforded corporate investment. Consequently, taking account of differing revenue costs would likely make less generous plans, such as a 50 percent dividend exclusion, compare more favorably with more generous plans, such as a full shareholder level exclusion. Although our cost of capital calculations assume that either all firms operate according to the old view of dividends or all operate according to the new view of dividends, this assumption may not be appropriate. As emphasized by Auerbach and Hassett (2003a), some firms may be on each margin, in addition, firms may change margins according to their circumstances. Under current law, the tax cost faced by old view firms is higher than that faced by new view firms |
| 主题 | Economics ; Public Economics |
| 标签 | fiscal |
| URL | https://www.aei.org/articles/the-effect-of-dividend-tax-relief-on-investment-incentives/ |
| 来源智库 | American Enterprise Institute (United States) |
| 资源类型 | 智库出版物 |
| 条目标识符 | http://119.78.100.153/handle/2XGU8XDN/238813 |
| 推荐引用方式 GB/T 7714 | Kevin A. Hassett,James B. Mackie,Robert Carroll. The Effect of Dividend Tax Relief on Investment Incentives. 2003. |
| 条目包含的文件 | 条目无相关文件。 | |||||
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