Document Type
Article
Publication Date
2016
Abstract
In general, I believe that integration is advisable as a way of addressing the biases of the classical system against using the corporate form, in favor of retaining earnings, and in favor of debt financing.
In terms of the bias against the corporate form, dividend deduction is as good as dividend exemption or imputation. In all three cases, there is only one level of tax imposed, at the shareholder level for dividend deduction or imputation, and at the corporate level for dividend exemption. If the top shareholder tax rate is higher than the corporate tax rate, both imputation and dividend deduction are superior to dividend exemption because with dividend exemption, noncorporate investments are taxed at a higher rate than corporate ones (so that the bias is reversed).
Recommended Citation
Avi-Yonah, Reuven S., David Burton, Curtis Dubay, David S. Miller, Steven T. Miller, Stuart L. Rosow, Eric Toder, Alan D. Viard, and Richard A. Westin. "Is Corporate Integration a Good Idea?" Tax Notes 151, no. 12 (2016): 1697-1704.