The vanishing harberger triangle

Hans-Werner Sinn

Munich Reprints in Economics from University of Munich, Department of Economics

Abstract: This paper shows that the double taxation of corporate dividends (or profit repatriations) implies a nucleus theory of the corporation. After the firm is set up with a small stock of original capital, it enters a phase of purely internal growth during which no dividends are paid and no shares are issued. The phase terminates when an efficient stock of capital has been accumulated and dividends are paid. During the growth phases, the tax distortion is inversely related to the tax burden and it is larger than conventional formulae for the cost of internal and external equity finance suggest.

Date: 1991
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Published in Journal of Public Economics 3 45(1991): pp. 271-300

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Related works:
Journal Article: The vanishing harberger triangle (1991)
Working Paper: The Vanishing Harberger Triangle (1990)
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Persistent link: https://EconPapers.repec.org/RePEc:lmu:muenar:19842

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