Four facts about dividend payouts and the 2003 tax cut

Jesse Edgerton ()

International Tax and Public Finance, 2013, vol. 20, issue 5, 769-784

Abstract: Recent literature has claimed that the 2003 U.S. dividend tax cut caused a large increase in aggregate dividend payouts. I document four simple facts that call this claim into question. First, the post-tax cut increase in dividend payouts coincided with a surge in corporate profits, such that the dividend payout ratio did not rise. Second, share repurchases increased even more rapidly than dividend payouts. Third, dividend payouts by Real Estate Investment Trusts also rose sharply, even though they did not qualify for reduced taxation. Finally, the stock market was forecasting an increase in dividend initiations by mid-2002, before the tax cut had been proposed. Copyright Springer Science+Business Media, LLC 2013

Keywords: Taxes; Payout policy; Dividends; Share repurchases; H20; G35 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (9)

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DOI: 10.1007/s10797-012-9242-z

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