Capital Tax Reform and the Real Economy: The Effects of the 2003 Dividend Tax Cut / Danny Yagan.

Format:

Book

Author/Creator:

Yagan, Danny.

Contributor:

National Bureau of Economic Research.

Series:

Working Paper Series (National Bureau of Economic Research) no. w21003.

NBER working paper series no. w21003

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Capital Tax Reform and the Real Economy

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2015.

Summary:

This paper tests whether the 2003 dividend tax cut--one of the largest reforms ever to a U.S. capital tax rate--stimulated corporate investment and increased labor earnings, using a quasi-experimental design and U.S. corporate tax returns from years 1996-2008. I estimate that the tax cut caused zero change in corporate investment and employee compensation. Economically, the statistical precision challenges leading estimates of the cost-of-capital elasticity of investment, or undermines models in which dividend tax reforms affect the cost of capital. Either way, it may be difficult to implement an alternative dividend tax cut that has substantially larger near-term effects.

Notes:

Print version record

March 2015.