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Shareholder tax cuts with household and firm heterogeneity

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  • Anagnostopoulos, Alexis
  • Atesagaoglu, Orhan Erem

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.

Suggested Citation

  • Anagnostopoulos, Alexis & Atesagaoglu, Orhan Erem, 2023. "Shareholder tax cuts with household and firm heterogeneity," Finance Research Letters, Elsevier, vol. 57(C).
    • Handle: RePEc:eee:finlet:v:57:y:2023:i:c:s1544612323005457
    DOI: 10.1016/j.frl.2023.104173
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    More about this item

    Keywords

    Dividends; Shareholder taxes; Heterogeneous shareholders and firms; Investment;
    All these keywords.

    JEL classification:

    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • G35 - Financial Economics - - Corporate Finance and Governance - - - Payout Policy

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