Integration of Corporate and Shareholder Taxes

35 Pages Posted: 16 May 2016 Last revised: 24 Jun 2016

Michael J. Graetz

Columbia Law School; Yale Law School

Alvin C. Warren Jr.

Harvard Law School

Date Written: May 5, 2016

Abstract

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.

Keywords: integration, corporate tax, income tax, shareholder credit, tax incentives, inversion, income shifting, dividend deduction with withholding, U.S. tax

Suggested Citation

Graetz, Michael J. and Warren, Alvin C., Integration of Corporate and Shareholder Taxes (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. Available at SSRN: https://ssrn.com/abstract=2780490

Michael J. Graetz (Contact Author)

Columbia Law School ( email )

435 West 116th Street
New York, NY 10025
United States

Yale Law School ( email )

P.O. Box 208215
New Haven, CT 06520-8215
United States

HOME PAGE: http://www.law.yale.edu/faculty/MGraetz.htm

Alvin C. Warren Jr.

Harvard Law School ( email )

1575 Massachusetts
Hauser Hall 308
Cambridge, MA 02138
United States

Paper statistics

Downloads
392
Rank
58,446
Abstract Views
965