The Dividend Divide in Anglo-American Corporate Taxation

72 Pages Posted: 11 Mar 2004

See all articles by Steven A. Bank

Steven A. Bank

University of California, Los Angeles (UCLA) - School of Law

Date Written: March 10, 2004


In this Article, I seek to understand why the United States and United Kingdom take such different approaches to the taxation of corporate income. Generally, the U.S. has taxed corporate income twice and the U.K. only once. In the last several years, however, both countries have undertaken major reforms of their respective corporate tax systems designed to change these traditional approaches. Far from being an isolated turn of events, this pattern of corporate tax reform behavior typifies Anglo-American corporate taxation over the last century. While both countries started with an integrated approach, they diverged in the 1930s and have been moving toward and away from each other in successive periods of reform ever since.

Why did the U.S. and U.K. - two countries with similarly developed economies and corporate cultures - originally diverge in their approaches to corporate income taxation and why have they continued to vacillate on this issue over time? This Article concludes that it is a result of a divergence in firm dividend policies in the two countries. While firms in both countries maintained liberal dividend policies during the nineteenth century, U.S. firms began to retain more earnings after the turn-of-the-century and this necessitated a change in the method of taxing corporate income. In subsequent years, both countries have undergone major corporate tax reforms during periods of concern about the direction of firm dividend policies in their respective countries. I suggest that this has important implications for predictions about the future of corporate income tax design.

Keywords: corporate tax income, corporate tax reform

Suggested Citation

Bank, Steven A., The Dividend Divide in Anglo-American Corporate Taxation (March 10, 2004). Available at SSRN: or

Steven A. Bank (Contact Author)

University of California, Los Angeles (UCLA) - School of Law ( email )

385 Charles E. Young Dr. East
Room 1242
Los Angeles, CA 90095-1476
United States
310-794-7601 (Phone)

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
PlumX Metrics