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
Date Written: March 20, 2003
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