Must-Read: Danny Yagan: Capital Tax Reform and the Real Economy: The Effects of the 2003 Dividend Tax Cut: "This paper tests whether the 2003 dividend tax cut...

...stimulated corporate investment and increased labor earnings, using a quasi-experimental design and US corporate tax returns from years 1996–2008. I estimate that the tax cut caused zero change in corporate investment and employee compensation.... The statistical precision challenges leading estimates of the cost-of-capital elasticity of investment, or undermines models in which dividend tax reforms affect the cost of capital...

http://eml.berkeley.edu/~yagan/DividendTax.pdf

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