ONLINE Seminar in Macroeconomics - Financing Corporate Tax Cuts with Shareholder Taxes
Time
Monday, 29. November 2021
16:00 - 17:15
Location
online
Organizer
Chair of International Economics and Economic Policy
Speaker:
Eva Cárceles-Poveda (Stony Brook University)
Please note the different start time due to the time difference between US and Europe.
Financing Corporate Tax Cuts with Shareholder Taxes
(with Alexis Anagnostopoulos and Orhan Erem Atesagaoglu)
Abstract: We study the aggregate and distributional consequences of replacing corporate profit taxes with shareholder taxes, namely taxes on dividends and capital gains, in a setting with incomplete markets and heterogeneity at both the household and the firm level. The reform yields distributional gains with a large majority of households benefiting. Moreover, if dividend and capital gains are taxed at the same rate, the reform is also effiiency-enhancing and the implied optimal corporate income tax rate is zero. In contrast, an asymmetric tax treatment of dividend and capital gains induces a trade-off between efficiency and distributional concerns that is optimally resolved at a positive optimal corporate tax rate, implying double taxation.