Working Paper: NBER ID: w0530
Authors: Daniel Feenberg
Abstract: Miller and Scholes show that under certain conditions the Federal Income tax taxes dividend income at a rate no higher than the rate on capital gains. Tabulations of actual 1977 tax returns show that the special circumstances under which this can occur apply to less than 3% of dividend income and no significant role can be ascribed to their result in the determination of corporate dividend policy.
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Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Investment interest limitation (Section 163d) (E22) | Preference for dividends among constrained taxpayers (G35) |
| Preference for dividends among constrained taxpayers (G35) | Increased borrowing capacity to offset tax liabilities (G32) |
| Dividends (G35) | Tax policy implications (H29) |
| Conditions of the Miller and Scholes hypothesis (C58) | Corporate dividend policy (G35) |