A Problem of Financial Market Equilibrium When the Timing of Tax Payments is Indeterminate

21 Pages Posted: 9 Mar 2004 Last revised: 8 Sep 2022

See all articles by David F. Bradford

David F. Bradford

Princeton University, Woodrow Wilson School; NBER; CESifo (Center for Economic Studies and Ifo Institute)

Date Written: October 1985

Abstract

If firms are indifferent about the timing of dividends, the government's cash flow from taxes on dividends is indeterminate. In an earlier paper, I showed in the context of a world without uncertainty that variations in tax receipts from this source would have no real effects. The extension of the analysis to a world of risk turns out to involve new elements that may be of some general interest. In particular, the conditions for neutrality seem less likely to be fulfilled in a practical context.

Suggested Citation

Bradford, David F., A Problem of Financial Market Equilibrium When the Timing of Tax Payments is Indeterminate (October 1985). NBER Working Paper No. w1713, Available at SSRN: https://ssrn.com/abstract=338785

David F. Bradford (Contact Author)

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