Working Paper: NBER ID: w9651
Authors: Randall Morck
Abstract: Arguments for eliminating the double taxation of dividends apply only to dividends paid by corporations to individuals. The double (and multiple) taxation of dividends paid by one firm to another intercorporate dividends - was explicitly included in the 1930s to eliminate pyramidal corporate groups. These structures exist elsewhere, and are associated with corporate governance problems, corporate tax avoidance, and a greater concentration of economic power than is currently possible in the United States. Current US tax reform proposals do not distinguish dividends paid to individuals from intercorporate dividends and, by eliminating double taxation on both sorts of dividends, may allow pyramidal groups in the US again for the first time since the 1930s.
Keywords: No keywords provided
JEL Codes: G3
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Introduction of double taxation on intercorporate dividends (G35) | Disassembly of pyramidal groups (L22) |
| Elimination of double taxation on intercorporate dividends (G35) | Resurgence of pyramidal groups (P30) |
| Resurgence of pyramidal groups (P30) | Governance issues and economic concentration (G38) |