Document Type

Article

Publication Date

2011

Abstract

The December 2010 compromise between President Barack Obama and the Republicans extended the 15% tax rate on dividends through the end of 2012. At that point, however, the rate may revert to the Clinton administration rate-39.6%-or be raised to 20%-as proposed by the Obama Administration. Thus, the United States may either abandon corporate-shareholder integration, maintain partial integration, or perhaps even adopt the George W Bush administration's 2003 proposal to exempt dividends altogether-as advocated by some Republicans in Congress. Given this uncertainty and the likelihood of additional Congressional action, now may be a good time to revisit the integration issue. Another reason for revisiting the topic is that several recent proposals would restrict the deductibility of interest at the corporate level as a way of reducing the pressure on the distinction between debt and equity, which was also a reason to adopt partial integration in 2003. The President's Economic Recovery Advisory Board has identified integration as a top policy priority in its report on options for federal tax reform.

Comments

This information or any portion thereof may not be copied or disseminated in any form or by any means or downloaded or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.


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