NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

The Incidence and Allocation Effects of a Tax on Corporate Distributions

David F. Bradford

NBER Working Paper No. 349 (Also Reprint No. r0162)
Issued in May 1979
NBER Program(s):   PE

To study the effects of 'double taxation' (first at the corporation level, then at the shareholder level this paper analyzes a model with a tax on all corporate distributions to equity owners and no other taxes. Contrary to the common view, the tax is shown to have no substitution effect and, in particular, no effect on the corporate choice between debt and equity (via retained earnings) finance. The analysis opens to question certain arguments commonly used to support integration of corporation and individual income taxes via 'dividend relief'.

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Document Object Identifier (DOI): 10.3386/w0349

Published: Bradford, David F. "The Incidence and Allocation Effects of a Tax on Corporate Distributions." Journal of Public Economics, Vol. 15, No. 1, (February 1981), pp. 1-22. citation courtesy of

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