Arbeitspapier
Mitigating shareholder taxation in small open economies?
This article reconsiders the role of dividend taxation and its effect on the cost of capital of small firms. Using a simple portfolio model for small open economies, we show that a decrease in dividend taxes on large companies unambiguously increases the required rate of return for small companies. A dividend tax cut for both, large and small companies may however lead to the counter-intuitive result of increasing cost of capital for small firms. For different small open economies, we further provide statistics on the correlation between the return of large and small firms that drives the counter-intuitive result. Our results suggest that mitigating payout taxes in small open economies can have ambiguous effects on the cost of capital of small, domestically owned firms. This is particularly relevant when tax reforms are designed to stimulate investments by small firms scarce in internal funds.
- Language
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Englisch
- Bibliographic citation
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Series: Working Paper ; No. 2012:12
- Classification
-
Wirtschaft
Personal Income and Other Nonbusiness Taxes and Subsidies; includes inheritance and gift taxes
Business Taxes and Subsidies including sales and value-added (VAT)
- Subject
-
shareholder taxation
corporate-personal tax integration
open economy
investment incentives
small firms
Körperschaftsteuer
Kapitalertragsteuer
Steuerreform
Kapitalkosten
Betriebsgröße
Kleine offene Volkswirtschaft
- Event
-
Geistige Schöpfung
- (who)
-
Jacob, Martin
Södersten, Jan
- Event
-
Veröffentlichung
- (who)
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Uppsala University, Department of Economics
- (where)
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Uppsala
- (when)
-
2012
- Handle
- URN
-
urn:nbn:se:uu:diva-181162
- Last update
-
10.03.2025, 11:45 AM CET
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Jacob, Martin
- Södersten, Jan
- Uppsala University, Department of Economics
Time of origin
- 2012
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Antitrust in Open Economies
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An Experimental Investigation of Wage Taxation and Unemployment in Closed and Open Economies
The effect of shareholder taxation on corporate ownership structures
Macroeconomics of small open economies
Environmental policy in open economies
Mitigating Double Taxation in an Open Economy
Corporate Taxation in Open Economies
Capital Taxation May Survive in Open Economies
Methods of Mitigating Double Taxation
Taxation of Shareholder Income and the Cost of Capital in a Small Open Economy
Destination vs. Origin-based Commodity Taxation in Large Open Economies with Unemployment
Antitrust in Open Economies
Growth in open economies
An Experimental Investigation of Wage Taxation and Unemployment in Closed and Open Economies
The effect of shareholder taxation on corporate ownership structures
Macroeconomics of small open economies
Environmental policy in open economies
Mitigating Double Taxation in an Open Economy
Corporate Taxation in Open Economies
Capital Taxation May Survive in Open Economies
Methods of Mitigating Double Taxation
Taxation of Shareholder Income and the Cost of Capital in a Small Open Economy
Destination vs. Origin-based Commodity Taxation in Large Open Economies with Unemployment
Antitrust in Open Economies
Growth in open economies
An Experimental Investigation of Wage Taxation and Unemployment in Closed and Open Economies
The effect of shareholder taxation on corporate ownership structures
Macroeconomics of small open economies