This essay briefly describes the main different theoretical approaches (tax systems) designed to alleviate the double burden of corporation tax and shareholder income tax under Part 2. Parts 3- 5 explain how the problem of dividend double taxation was tried to be solved in the heterogeneous tax systems of the Germany, the UK and the US. However, the essay will not cover the different double tax avoiding treaties in force in those countries.
Inhaltsverzeichnis (Table of Contents)
- INTRODUCTION
- GENERAL DESCRIPTION OF DIFFERENT TAX SYSTEMS
- CLASSICAL SYSTEM
- DOUBLE TAXATION REDUCING SYSTEMS
- DIVIDEND DEDUCTION SYSTEM
- SPLIT RATE SYSTEM
- SHAREHOLDER RELIEF SYSTEM
- PARTIAL IMPUTATION SYSTEM
- DOUBLE TAXATION AVOIDING SYSTEMS
- DIVIDEND DEDUCTION SYSTEM/SPLIT CORPORATE TAX RATE SYSTEM
- FULL TAX IMPUTATION SYSTEM
- DIVIDEND EXEMPTION SYSTEM
- THE GERMAN APPROACH
- THE FORMER GERMAN IMPUTATION SYSTEM
- THE NEW GERMAN SHAREHOLDER RELIEF SYSTEM
- DISTORTIONS OF THE GERMAN CORPORATE TAX SYSTEM
- NEUTRALITY TOWARDS CORPORATE FINANCE DECISIONS
- INTERNATIONAL NEUTRALITY
- NEUTRALITY TOWARDS LEGAL FORM OF BUSINESS
- OTHERS
- THE UK APPROACH
- THE FORMER UK PARTIAL IMPUTATION SYSTEM (THE ACT SYSTEM)
- CHANGES MADE TO THE ACT SYSTEM
- DISTORTIONS UNDER THE UK CORPORATE TAX SYSTEM
- NEUTRALITY TOWARDS CORPORATE FINANCE DECISIONS
- INTERNATIONAL NEUTRALITY
- NEUTRALITY TOWARDS LEGAL FORM OF BUSINESS
- OTHERS
- THE US APPROACH
- THE US CLASSICAL SYSTEM
- INTEGRATION SYSTEMS UNDER THE CLASSICAL SYSTEM
- DISTORTIONS UNDER THE US CLASSICAL SYSTEM
- NEUTRALITY TOWARDS CORPORATE FINANCE DECISIONS
- INTERNATIONAL NEUTRALITY
- NEUTRALITY TOWARDS LEGAL FORM OF BUSINESS
- OTHERS
- THE US CLASSICAL SYSTEM
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
This research essay explores the different approaches taken by various countries in addressing the issue of dividend relief within their corporate income tax systems. It examines the distortions caused by these approaches, identifying both desirable and undesirable effects.
- Double taxation of dividends and its economic distortions
- Different approaches to dividend relief: classical system, double taxation reducing systems, and double taxation avoiding systems
- Analysis of specific countries' corporate tax systems: Germany, UK, and US
- The distortions caused by each approach: neutrality towards corporate finance decisions, international neutrality, neutrality towards legal form of business
- Comparative assessment of the effectiveness and impact of different dividend relief systems
Zusammenfassung der Kapitel (Chapter Summaries)
- Introduction: Discusses the problem of double taxation of dividends, highlighting its economic distortions such as favoring debt financing, fostering cash hoarding, and encouraging speculation.
- General Description of Different Tax Systems: Categorizes corporate tax systems based on the degree of integration of corporate income taxation into personal income taxation, outlining classical systems, double taxation reducing systems (including dividend deduction, split rate, shareholder relief, and partial imputation systems), and double taxation avoiding systems.
- The German Approach: Reviews the former German imputation system, the new shareholder relief system, and the distortions caused by the German corporate tax system, including its impact on corporate finance decisions, international neutrality, and legal form of business.
- The UK Approach: Examines the former UK partial imputation system (ACT system), the changes made to it, and the distortions caused by the UK corporate tax system, focusing on its impact on corporate finance decisions, international neutrality, and legal form of business.
- The US Approach: Analyzes the US classical system, integration systems within the classical system, and the distortions caused by the US classical system, including its impact on corporate finance decisions, international neutrality, and legal form of business.
Schlüsselwörter (Keywords)
This research paper focuses on corporate income tax systems, dividend relief, double taxation, economic distortions, corporate finance decisions, international neutrality, neutrality towards legal form of business, classical system, double taxation reducing systems, double taxation avoiding systems, imputation system, shareholder relief system, dividend deduction system, split rate system, Germany, UK, US.
Frequently Asked Questions
What is dividend double taxation?
It refers to the situation where corporate profits are taxed first at the corporate level and then again as income for the shareholder when distributed as dividends.
How does the "Classical System" handle dividends?
In a classical system, like the one used in the US, corporations and shareholders are treated as separate entities, leading to full double taxation of dividends.
What is an "Imputation System"?
An imputation system allows shareholders to credit a portion of the tax paid by the corporation against their own personal income tax liability.
Which countries are compared in this essay?
The essay compares the corporate income tax systems and dividend relief methods of Germany, the United Kingdom, and the United States.
What economic distortions are caused by double taxation?
It can favor debt financing over equity, encourage companies to hoard cash instead of paying dividends, and influence decisions on the legal form of a business.
- Citation du texte
- Benjamin Mahr (Auteur), 2004, Comparison of US, UK and German corporate income tax systems with respect to dividend relief, Munich, GRIN Verlag, https://www.grin.com/document/28077
