How to Eliminate Pyramidal Business Groups: The Double Taxation of Intercorporate Dividends and Other Incisive Uses of Tax Policy

Arguments for eliminating the double taxation of dividends apply only to dividends paid by corporations to individuals The double (and multiple) taxation of dividends paid by one firm to another—intercorporate dividends—was explicitly included in the 1930s as part of a package of tax and other policies aimed at eliminating US pyramidal business groups. These structures remain the predominant form of corporate organization outside the United States. The first Roosevelt administration associated them with corporate governance problems, corporate tax avoidance, market power, and highly concentrated economic power, and undertook a sustained program that rapidly broke up large American pyramidal groups.