Contributions

  • Dharmapala, Dhammika - Contributor
  • National Bureau of Economic Research. - Contributor

Publication

2007 - National Bureau of Economic Research, Cambridge, Mass, Massachusetts

Language

English

Word Count

6,000 words, Guess

Page Count

24 pages

Identifiers

Classifications

  • LCCHB1

Description

This paper investigates how taxes influence portfolio choices by exploring the response to the distinctive treatment of foreign dividends in the Jobs and Growth Tax Relief Reconciliation Act (JGTRRA). JGTRRA lowered the dividend tax rate to 15% for American equities and extended this tax relief only to foreign corporations from a subset of countries. This paper uses a difference-in-difference analysis that compares US equity holdings in affected and unaffected countries. The international investment responses to JGTRRA were substantial and imply an elasticity of asset holdings with respect to taxes of -1.6. This effect cannot be explained by several potential alternative hypotheses, including differential changes to the preferences of American investors, differential changes in investment opportunities, differential time trends in investment or changed tax evasion behavior.

Subjects

Topics

Places

Series Statement

  • NBER working paper series -- no. 13281.
  • Working paper series (National Bureau of Economic Research) -- working paper no. 13281.

Links

Reader Reviews

No reviews yet for this book.

Be the first to share your thoughts!