Integration of Corporate and Shareholder Taxes
Michael J. Graetz
Columbia Law School; Yale Law School
Alvin C. Warren Jr.
Harvard Law School
May 5, 2016
National Tax Journal, Forthcoming
Yale Law & Economics Research Paper No. 540
Columbia Law and Economics Working Paper No. 541
Harvard Public Law Working Paper No. 16-36
Integration of the corporate and individual income taxes can be achieved by providing shareholders a credit for corporate taxes paid with respect to corporate earnings distributed as dividends. When such integration was previously considered in the U.S., proponents emphasized that it could reduce or eliminate many of the familiar distortions of a classical corporate income tax. Integration would also provide a framework for addressing current concerns for tax incentives for U.S. companies to shift income to foreign affiliates in lower-taxed countries or to expatriate in "inversion" transactions. A recent Congressional proposal for a corporate dividend deduction coupled with withholding on dividends could achieve equivalent results, while also reducing effective U.S. corporate tax rates.
Number of Pages in PDF File: 35
Keywords: integration, corporate tax, income tax, shareholder credit, tax incentives, inversion, income shifting, dividend deduction with withholding, U.S. tax
Date posted: May 16, 2016 ; Last revised: June 24, 2016