ON THE "TRADITIONAL" and "NEW" VIEWS OF DIVIDEND TAXATION

The wait for the forthcoming Treasury report on corporate and individual tax integration has increased interest in the question of whether the "traditional" view or the "new" view of dividend taxes more accurately describes their effects. Unfortunately, despite the fact that the "new" view is actually nearly twenty years old, this issue—which is critical both to evaluating the need for integration and to designing integration schemes—is still unresolved in the literature. This paper summarizes the debate, focusing on the theoretical foundations of both the traditional and new views and on recent empirical tests that distinguish between the competing views.