Center for Korean Legal Studies
Integration of the corporate and individual income taxes can be achieved by providing shareholders a credit for corporate taxes paid with respect to corporate earnings distributed as dividends. When such integration was previously considered in the U.S., proponents emphasized that it could reduce or eliminate many of the familiar distortions of a classical corporate income tax. Integration would also provide a framework for addressing current concerns for tax incentives for U.S. companies to shift income to foreign affiliates in lower-taxed countries or to expatriate in "inversion" transactions. A recent Congressional proposal for a corporate dividend deduction coupled with withholding on dividends could achieve equivalent results, while also reducing effective U.S. corporate tax rates.
Michael J. Graetz & Alvin C. Warren,
Integration of Corporate and Shareholder Taxes,
National Tax Journal, Vol. 69, p. 677, 2016; Harvard Public Law Working Paper No. 16-36; Yale Law & Economics Working Paper No. 540; Columbia Law & Economics Working Paper No. 541
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