Dividend Taxes and Consumption of Firm Owners

The paper presented in this ZEW Research Seminar examines the effect of dividend taxes on shareholder consumption. The authors estimate consumption using Norwegian administrative tax data and study a large dividend tax hike in 2006.  They also test to what extent shareholders are able to shift private consumption to the firm level. The results have direct implications for policymakers because these results help assess the welfare consequences of taxing payout. Moreover, the authors close an important gap in the literature by assessing consumption of firm owners of private companies, i.e., the firms which are responsible for the majority of economic activity and jobs in most economies around the world.