We found a match
Your institution may have rights to this item. Sign in to continue.
- Title
TAXES, CORPORATE DIVIDEND POLICY AND PERSONAL SAVINGS: THE BRITISH POSTWAR EXPERIENCE.
- Authors
Feldstein, Martin; Fane, George
- Abstract
Tax policies in Great Britain and the United States significantly affect corporate dividend behavior. The lower rates of tax on retained earnings than on dividends induce companies to retain a substantial fraction of their cash flow. Since these retained earnings are a large share of gross private saving, the tax incentives could have a major influence on the rate of capital accumulation. The purpose of the current paper is to examine the extent to which tax induced changes in retained earnings do in fact also influence personal saving and therefore total private capital formation. The results are important not only for the appraisal of tax policy but also for understanding household saving behavior. An estimate of the effect of changes in retained earnings on private saving is important for an appraisal of the desirability of the tax incentives. Although increased private saving may be a goal of public policy, the tax incentives have offsetting disadvantages. These provisions clearly affect the form of capital accumulation, i.e., its distribution between the corporate sector and the rest of the economy.
- Subjects
UNITED Kingdom; CORPORATE finance; TAXATION; RETAINED earnings; SAVINGS; UNDISTRIBUTED profits tax; CONSUMPTION (Economics); DIVIDENDS; CAPITAL
- Publication
Review of Economics & Statistics, 1973, Vol 55, Issue 4, p399
- ISSN
0034-6535
- Publication type
Article
- DOI
10.2307/1925662