Neutral taxation of shareholder income? corporate responses to an announced dividend tax

International Tax and Public Finance

Volumn 16, Issue 4, 2009, Pages 571-604

  Alstadsæter, Annette ^a,b,c   Fjærli, Erik ^b  

^a UNIVERSITY OF OSLO   (Norway)

^b STATISTICS NORWAY   (Norway)

^c CESIFO   (Germany)

Author keywords

Anticipation effects; Corporate financial policy; Dual income tax; Intertemporal income shifting; Neutral dividend tax; Transition

Indexed keywords

EID: 70349500243     PISSN: 09275940     EISSN: 15736970     Source Type: Journal    
DOI: 10.1007/s10797-009-9107-2     Document Type: Article

References (58)

1. Aarbu, K. O., & Thoresen, T. O. (2001). Income responses to tax changes-evidence from the Norwegian tax reform. National Tax Journal, 54(2), 319-338.
2. Allen, F., & Michaely, R. (2003). Payout policy. In G. M. Constantinides, M. Harris, & R. M. Stulz (Eds.). Handbook of the economics of finance. Amsterdam: Elsevier.
3. Alstadsæter, A. (2007). The Achilles heel of the dual income tax. The Norwegian case. Finnish Economic Papers, 20, 5-22.
4. Alstadsæter, A., & Wangen, K. R. (2008). Corporations' choice of tax regime when transition costs are small and income shifting potential is large (CESifo Working Paper No. 2392).
5. Alstadsæter, A., Fjærli, E., & Thoresen, T. O. (2006). Om bakgrunnen for og utformingen av skattereformen i 2006. Beta. Scandinavian Journal of Business Research, 64-80.
6. Alvarez, L. H. R., Kanniainen, V., & Södersten, J. (1998). Tax policy uncertainty and corporate investments. A theory of tax-induced investments spurts. Journal of Public Economics, 69, 17-48.
7. Andersson, K., Kanniainen, V., Södersten, J., & Sørensen, P. B. (1998). Corporate tax policy in the Nordic Countries. In P. B. Sørensen (Ed.). Tax policy in the Nordic Countries (pp. 72-137). London: Macmillan.
8. Auerbach, A. (1979). Wealth maximization and the cost of capital. Quarterly Journal of Economics, 94, 433-446.
9. Auerbach, A. (2003). Taxation and corporate financial policy. In A. Auerbach & M. Feldstein (Eds.), Handbook of public economics 3. Amsterdam: North-Holland.
10. Auerbach, A., & Hasset, K. (2002). On the marginal source of investment funds. Journal of Public Economics, 87, 205-232.
11. Auerbach, A., & Hasset, K. (2006). Dividend taxes and firm valuation. New evidence. American Economic Review, 96(2), 119-123.
12. Auerbach, A., & Hasset, K. (2007). The 2003 dividend tax cuts and the value of the firm. An event study. In A. Auerbach, J. R. Hines, & J. Slemrod (Eds.), Taxing corporate income in the 21st century. Cambridge: Cambridge University Press.
13. Baker, H. K., Mukherjee, T. K., & Paskelian, O. G. (2006). How Norwegian managers view dividend policy. Global Finance Journal, 17, 155-176.
14. Baker, M., & Wurgler, J. (2004). A catering theory of dividends. Journal of Finance, 59, 1125-1165.
15. Bernheim, B. D., & Wantz, A. (1995). A tax-based test of the dividend signalling hypothesis. American Economic Review, 85(3), 532-551.
16. Boadway, R. (2004). The dual income tax system-an overview. CESifo DICE Report, 2(3), 3-8.
17. Bond, S. R., Devereux, M. P., & Klemm, A. (2007). Dissecting dividend decisions. Some clues about the effects of dividend taxation from recent UK tax reforms. In A. Auerbach, J. R. Hines, & J. Slemrod (Eds.), Taxing corporate income in the 21st century. Cambridge: Cambridge University Press.
18. Bradford, D. (1981). The incidence and allocation effects of a tax on corporate distributions. Journal of Public Economics, 15, 1-22.
19. Chetty, R., & Saez, E. (2005). Dividend taxes and corporate behavior. Evidence from the 2003 dividend tax cut. Quarterly Journal of Economics, 120(3), 791-833.
20. Chetty, R., & Saez, E. (2007). An agency theory of dividend taxation (NBER Working Paper No. 13538).
21. DeAngelo, H., DeAngelo, L., & Skinner, D. J. (2004). Are dividends disappearing? Dividend concentration and the consolidation of earnings. Journal of Financial Economics, 72, 425-456.
22. Denis, D. J., & Osobov, I. (2008). Why do firms pay dividends? International evidence on the determinants of dividend policy. Journal of Financial Economics, 89, 62-82.
23. Desai, M. A., & Goolsbee, A. D. (2004). Investment, overhang and tax policy. Brookings Papers on Economic Activity, 2, 285-355.
24. Fama, E. F., & French, K. R. (2001). Disappearing dividends. Changing firm characteristics or lower propensity to pay? Journal of Financial Economics, 60, 3-43.
25. Fjærli, E. (2004). Tax reform and the demand for debt. International Tax and Public Finance, 11, 435-467.
26. Fjærli, E., & Lund, D. (2001). The choice between owner's wages and dividends under the dual income tax. Finnish Economic Papers, 14, 104-119.
27. Gordon, R. H., & Dietz, M. (2009). Dividends and taxes. In A. Auerbach & D. Shaviro (Eds.), Institutional foundations of public finance. Economic and legal perspectives. Cambridge: Harvard University Press.
28. Gordon, R., & Slemrod, J. (2000). Are "real" responses to taxes simply income shifting between corporate and personal tax base? In J. Slemrod (Ed.), Does Atlas shrug? The economic consequences of taxing the rich (pp. 240-288). Cambridge: Harvard University Press. Russel Sage Foundation, Chap. 8.
29. Hagen, K. P., & Sørensen, P. B. (1998). Taxation of income from small businesses. Taxation principles and tax reforms in the Nordic Countries. In P. B. Sørensen (Ed.). Tax policy in the Nordic Countries (pp. 28-71). London: Macmillan.
30. Hansson, Å. (2004). Taxpayers responsiveness to tax rate changes and implications for the cost of taxation (Department of Economics Working Paper No. 5). Lund University.
31. Harberger, A. (1962). The incidence of the corporation tax. Journal of Political Economy, 70(3), 215-240.
32. Harberger, A. (1966). Efficiency effects of taxes on income from capital. In M. Krzyzakniak (Ed.), Effects of corporation income tax. Detroit: Detroit Waine State University Press.
33. Hines, J. R. (1996). Dividends and profits. Some unsubtle foreign influences. Journal of Finance, 51, 661-689.
34. Jacobsen, M. R. (2008). In Yearbook for Nordic tax research 2008. Norwegian Economic National Report-Taxation of capital and wage income; towards separated or more integrated personal systems. Copenhagen: DJØF Publishing.
35. Jensen, M. (1986). Agency costs of free cash flow, corporate finance, and takeovers. American Economic Review, 76(2), 59-83.
36. Kari, S. (1999). Dynamic behaviour of the firm under dual income taxation (VATT Research Reports 51). Government Institute for Economic Research, Helsinki.
37. Kari, S., Karikallio, H., & Pirttilä, J. (2008). Anticipating tax changes. Evidence from the Finnish corporate income tax reform of 2005. Fiscal Studies, 29(2), 167-196.
38. King, M. (1974). Taxation and the cost of capital. Review of Economic Studies, 41(1), 21-35.
39. Korinek, A., & Stiglitz, J. E. (2008). Dividend taxation and intertemporal tax arbitrage (NBER Working Paper No. 13858).
40. Lindhe, T., Södersten, J., & Öberg, A. (2004). Economic effects of taxing different organizational forms under the Nordic dual income tax. International Tax and Public Finance, 11, 477-505.
41. Lintner, J. (1956). Distribution of incomes of corporations among dividends, retained earnings, and taxes. American Economic Review, 46, 97-113.
42. MacKie-Mason, J. K. (1990). Do taxes affect corporate financing decisions? The Journal of Finance, 45(5), 1471-1493.
43. Miller, M. H., & Modigliani, F. (1961). Dividend policy, growth, and the valuation of shares. Journal of Business, 34, 411-433.
44. Modigliani, F., & Miller, H. M. (1958). The cost of capital, corporation finance, and the theory of investment. American Economic Review, 48(3), 261-297.
45. Myers, S. C., & Majluf, N. S. (1984). Corporate financing and investment decisions when firms have information that investors do not have. Journal of Financial Economics, 12, 187-221.
46. Nielsen, S. B., & Sørensen, P. B. (1997). On the optimality of the Nordic system of dual income taxation. Journal of Public Economics, 63, 311-329.
47. Pirttilä, J., & Selin, H. (2006). How successful is the dual income tax? Evidence from the Finnish tax reform of 1993 (Department of Economics Working Paper No. 26). November 2006, University of Uppsala.
48. Poterba, J. (2004). Taxation and corporate payout policy. American Economic Review, 94(2), 171-175.
49. Poterba, J., & Summers, L. (1985). The economic effects of dividend taxation. In E. Altman & M. Subrahmanyam (Eds.), Recent advances in corporate finance (pp. 227-284). Homewood: Irwin Publishers.
50. Selén, J. (2002). Taxable income responses to tax changes-a panel analysis of the 1990/91 Swedish reform (Trade Union Institute for Economic Research, Working Paper No. 177).
51. Sinn, H. W. (1991). The vanishing Harberger triangle. Journal of Public Economics, 45, 271-300.
52. Slemrod, J. B. (1995). Income creation or income shifting? Behavioral responses to the tax reform act of 1986. American Economic Review Papers and Proceedings, 85, 175-180.
53. Sørensen, P. B. (1994). From the global income tax to the dual income tax. Recent tax reforms in the Nordic countries. International Tax and Public Finance, 1, 57-79.
54. Sørensen, P. B. (Ed.). (1998). Tax policy in the Nordic Countries. London: Macmillan.
55. Sørensen, P. B. (2005a). Neutral taxation of shareholder income. International Tax and Public Finance, 12, 777-801.
56. Sørensen, P. B. (2005b). Dual income taxation. why and how? FinanzArchiv, 61, 559-586.
57. Thoresen, T. O. (2004). Reduced tax progressivity in Norway in the nineties. The effect from tax changes. International Tax and Public Finance, 11, 487-506.
58. Thoresen, T. O., & Alstadsæter, A. (2008). Shifts in organizational form under a dual income tax system (CESifo Working Paper No. 2273).