Follow the money! Why dividends overreact to flat-tax reforms - PSE Working Papers
Pré-Publication, Document De Travail Année : 2024

Follow the money! Why dividends overreact to flat-tax reforms

Résumé

We estimate behavioral responses to dividend taxation using recent French reforms: a rate hike followed, five years later, by a cut. Exploiting household and firm tax data as well as data linking firms and shareholders, we find very large dividend tax elasticities to both reforms. Individuals who control firms adjust dividend receipts instantaneously, accounting for most of the aggregate dividend reaction. Investment is insensitive to dividend taxation. Dividend adjustments are instead driven by corporate saving, as owner-managers treat firms as low-tax saving vehicles. Our results fit the ‘new view’ of dividend taxation, provided an additional low-tax yet costly payout option is available that offers a tax arbitrage opportunity to entrepreneurs in control of their firms.
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Dates et versions

halshs-02415470 , version 1 (17-12-2019)
halshs-02415470 , version 2 (02-09-2024)

Identifiants

  • HAL Id : halshs-02415470 , version 2

Citer

Laurent Bach, Antoine Bozio, Arthur Guillouzouic, Claire Leroy, Clément Malgouyres. Follow the money! Why dividends overreact to flat-tax reforms. 2024. ⟨halshs-02415470v2⟩
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