Does the Investment Interest Limitation Explain the Existence of Dividends?
Miller and Scholes show that under certain conditions the Federal Income tax taxes dividend income at a rate no higher than the rate on capital gains. Tabulations of actual 1977 tax returns show that the special circumstances under which this can occur apply to less than 3% of dividend income and no significant role can be ascribed to their result in the determination of corporate dividend policy.
|Date of creation:||Aug 1980|
|Date of revision:|
|Publication status:||published as Feenberg, Daniel. "Does the Investment Interest Limitation Explain the Existence of Dividends?" Journal of Financial Economics, Vol. 9, No. 3, (September 1981), pp. 265-269.|
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