Shareholder tax cuts with household and firm heterogeneity

Alexis Anagnostopoulos and Orhan Erem Atesagaoglu

Finance Research Letters, 2023, vol. 57, issue C

Abstract: The large reduction in dividend tax rates stipulated in the Jobs and Growth Tax Relief Reconciliation Act of 2003 has been found empirically to have no, or minor, effects on real outcomes. Motivated by this fact, we build a model that incorporates counteracting theoretical mechanisms of dividend taxes to determine which mechanism dominates quantitatively. Consistently with the empirical findings, the quantitative model generates a small negative effect on investment and negligible positive effects on output and labor earnings.

Keywords: Dividends; Shareholder taxes; Heterogeneous shareholders and firms; Investment (search for similar items in EconPapers)
JEL-codes: E6 G12 G31 G35 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:57:y:2023:i:c:s1544612323005457

DOI: 10.1016/j.frl.2023.104173

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