IDEAS home Printed from https://ideas.repec.org/a/ntj/journl/v70y2017i3p621-642.html
   My bibliography  Save this article

Capital Gains Taxation and Corporate Investment

Author

Listed:
  • David A. Weisbach

Abstract

This study examines the interaction of dividend taxes and capital gains taxes from the sale of stock. Capital gains taxes produce lock-in, increasing the required rate of return for a sale and reinvestment. Using a model of the new view of the corporate tax, this study shows that the lock-in effect when stock is sold determines the optimal dividend payment, increasing the required rate of return for corporate investment. As a result, capital gains taxes on sales of stock increase dividend payments and reduce investment. The new view result, that dividend taxes do not affect investment, however, survives in this setting. The study also considers differences between dividends and repurchases and sales between heterogeneous investors, both which alter the tax incentives for sales and distributions.

Suggested Citation

  • David A. Weisbach, 2017. "Capital Gains Taxation and Corporate Investment," National Tax Journal, National Tax Association;National Tax Journal, vol. 70(3), pages 621-642, September.
    • Handle: RePEc:ntj:journl:v:70:y:2017:i:3:p:621-642
    DOI: 10.17310/ntj.2017.3.04
    as

    Download full text from publisher

    File URL: https://doi.org/10.17310/ntj.2017.3.04
    Download Restriction: Access is restricted to subscribers and members of the National Tax Association.
    File URL: https://libkey.io/10.17310/ntj.2017.3.04?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Rainer Niemann & Mariana Sailer, 2023. "Is analytical tax research alive and kicking? Insights from 2000 until 2022," Journal of Business Economics, Springer, vol. 93(6), pages 1149-1212, August.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ntj:journl:v:70:y:2017:i:3:p:621-642. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: The University of Chicago Press (email available below). General contact details of provider: https://www.ntanet.org/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.