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The bugaboo of double taxation




The President is pleading for a drastic reform of our tax system that would exempt corporate dividends from the personal income tax, using the bugaboo of double taxation and of a weak economy. However, upon closer examination, one must conclude that these are but excuses for advancing his real agenda, namely to make the richest richer at the expense of everybody else, including future generations. One big step is to give them a free tax rebate, estimated at U.S.$400 billion just for the first ten years. But an even more powerful step in this direction, dear to extreme conservatives, is to replace the progressive income tax with a flat tax. This is precisely what the President is recommending: at present, dividends are subject to two taxes, a flat rate corporate tax and a progressive personal tax. His recommendation is, of course, to abolish the progressive tax and keep the flat rate corporate tax! If his recommendation passed, he would have made a great stride toward the abolition of the principle of progressiveness.

Suggested Citation

  • Modigliani, Franco & Solow, Robert, 2003. "The bugaboo of double taxation," Journal of Financial Transformation, Capco Institute, vol. 8, pages 6-7.
  • Handle: RePEc:ris:jofitr:1313

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    References listed on IDEAS

    1. Krishnamurthy, Arvind, 2003. "Collateral constraints and the amplification mechanism," Journal of Economic Theory, Elsevier, vol. 111(2), pages 277-292, August.
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    More about this item


    Tax reform; double taxation; progressive tax;

    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation


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