Further Evidence on the Shifting of Corporate Income Tax in Privately Owned Electric Utilities, 1948–1984

Bharat R. Kolluri
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Bharat R. Kolluri: University of Hartford

Public Finance Review, 1988, vol. 16, issue 4, 493-507

Abstract: The purpose of this article is to empirically estimate the effects of the federal corporate income tax, dividend yield, and inflation on the rate of return in investor-owned electric utilities in the United States. Using data from the period before the seventies, some authors were able to show some evidence toward a partial shifting of the tax burden in regulated utilities. An attempt is made here to reexamine these findings and extend them into the eighties. The results point to a conclusion of a short-run partial shifting of about 60% in contrast to a mere 40% reported earlier. The results do not reject the hypothesis of a significant positive relationship between the dividend yield and the profit rate, contradicting the theory that dividend policy is irrelevant. Finally, there is some indication of a depressing effect of inflation on the rate of return during the most recent inflationary time period, 1974–1984.

Date: 1988
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Persistent link: https://EconPapers.repec.org/RePEc:sae:pubfin:v:16:y:1988:i:4:p:493-507

DOI: 10.1177/109114218801600406

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