Why Some Double Taxation Might Make Sense: The Special Case Of
Inter-Corporate Dividends

Morck, Randall

doi:10.2139/ssrn.369220

Why Some Double Taxation Might Make Sense: The Special Case Of Inter-Corporate Dividends

University of Alberta Center for Financial Research Working Paper No. 03-01

46 Pages Posted: 17 Apr 2003

See all articles by Randall Morck

Randall Morck

University of Alberta - Department of Finance and Statistical Analysis; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI); Asian Bureau of Finance and Economic Research

Date Written: March 20, 2003

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 strategies, and a greater concentration of economic power than is currently possible in the United States. The status of intercorporate dividend taxation under current reform proposals is unclear.

Keywords: Dividends, Taxation, Corporate Finance, Public Finance

JEL Classification: H2, G35, H25

Suggested Citation: Suggested Citation

Morck, Randall K., Why Some Double Taxation Might Make Sense: The Special Case Of Inter-Corporate Dividends (March 20, 2003). University of Alberta Center for Financial Research Working Paper No. 03-01, Available at SSRN: https://ssrn.com/abstract=369220 or http://dx.doi.org/10.2139/ssrn.369220