Does the Investment Interest Limitation Explain the Existence of Dividends?

Daniel Feenberg (feenberg@nber.org)

No 530, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: 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: 1980-08
Note: PE
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Citations: View citations in EconPapers (9)

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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Journal Article: Does the investment interest limitation explain the existence of dividends? (1981)
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