If firms are indifferent about the timing of dividends, the government's cash flow from taxes on dividends is indeterminate. In an earlier paper, I showed in the context of a world without uncertainty that variations in tax receipts from this source would have no real effects. The extension of the analysis to a world of risk turns out to involve new elements that may be of some general interest. In particular, the conditions for neutrality seem less likely to be fulfilled in a practical context.
*Published:
Bradford, David F. "A Problem of Financial Market Equilibrium When the Timing of Tax Payments is Indeterminate," Social Choice and Public Decision Making: Essays in Honor of Kenneth J. Arrow, ed. Walter P. Heller, Ross M. Starr and David A. Starrett, Vol. 1, N.Y.: Cambridge Univ. Press, pp. 177-88
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