Corporate Finance: Instructor\'s Manual Applied Corporate Finance

(Amelia) #1
Aswath Damodaran 420

IV. But the change in dividend tax law in 2003 may cause a


shift back to dividends


A seismic shift in the tax law in 2003. For the first time, dividends are taxed at


the same rate as capital gains.... Firms are responding with higher dividends.

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