Dividend and Capital Gains Taxation in a Cross-Section of Firms
Type
working paper
Date Issued
2003
Author(s)
Dietz, Martin
Abstract
This paper analyzes the general equilibrium effects of the new view on dividend taxation. It embeds the nucleus theory of firm development of Sinn (1991) into a framework of monopolistic competition with new firm creation.
Dividend and capital gains taxes affect the outcome in two dimensions:
First, a differential treatment of dividends and capital gains distorts the
allocation of capital across firms. Second, dividend as well as capital gains taxes are anticipated at the start-up stage of firms. The capitalization is shown to depress firm creation and aggregate capital accumulation.
Dividend and capital gains taxes affect the outcome in two dimensions:
First, a differential treatment of dividends and capital gains distorts the
allocation of capital across firms. Second, dividend as well as capital gains taxes are anticipated at the start-up stage of firms. The capitalization is shown to depress firm creation and aggregate capital accumulation.
Language
English
HSG Classification
not classified
Refereed
No
Subject(s)
Division(s)
Eprints ID
2092