How to Eliminate Pyramidal Business Groups: The Double Taxation of Inter-Corporate Dividends and Other Incisive Uses of Tax Policy

Tax Policy & the Economy, Volume 19, National Bureau of Economic Research

University of Alberta School of Business Research Paper No. 2013-610

Posted: 6 Jun 2013

See all articles by Randall Morck

Randall Morck

University of Alberta - Department of Finance and Statistical Analysis; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI); Asian Bureau of Finance and Economic Research

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Date Written: August 5, 2004

Abstract

Arguments for eliminating the double taxation of dividends apply only to dividends paid by corporations to individuals. The double (and multiple) taxation of dividends paid by one firm to another - intercorporate dividends - was explicitly included in the 1930s as part of a package of tax and other policies aimed at eliminating United States pyramidal business groups. These structures remain the predominant form of corporate organization outside the United States. The first Roosevelt administration associated them with corporate governance problems, corporate tax avoidance, market power, and an objectionable concentration of economic power; and undertook a sustained program that rapidly broke up large American pyramidal groups.

JEL Classification: H1, G3

Suggested Citation

Morck, Randall K., How to Eliminate Pyramidal Business Groups: The Double Taxation of Inter-Corporate Dividends and Other Incisive Uses of Tax Policy (August 5, 2004). Tax Policy & the Economy, Volume 19, National Bureau of Economic Research, University of Alberta School of Business Research Paper No. 2013-610, Available at SSRN: https://ssrn.com/abstract=2275063

Randall K. Morck (Contact Author)

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