Abstract

This study investigates enforcement effects of the corporate earings circulation tax (“CECT” hereafter) and, based on the economic review on that, deducts policy implications on whetehr to continue and how to revise CECT. Based on results of this study, firms which had been to be a potential target of CECT restrictively increased forced circulation amounts, which are composed of investments, increase in wages, or dividends, to reduce expected corporate tax burdens. Specifically, potential target firms of investment－inclusive CECT increased both investment and dividends significantly, while wages increase did not changed significantly. On the other hand, potential target fims of investment－exclusive CECT did not change both wages increase and dividends significantly, while reduced investments, which is then not contained within the circulation amounts, significantly to consider financial charges caused by CECT, which exerted harmful influences on productive expenditures as a result. To sum up, the intent of CECT, which is the “virtuous circulation of national economy” whith increased circulation amounts, was partially realized, while sufficient economic effects were hard to be found because of tax strategies of target firms to comply with CECT only whithin financial charges neutral bounds.

Keywords

• Corporate earnings circulation taxation
• Investments
• Wages increase
• Dividends
• Circulation amounts

Related Articles

• A Study on the Problems and Improvement of the Tax Improvement Plan for Corporate Value－Up

  Sung Ook Park , Young Woo Kim , Seo Hyun Kim

  25(4) 131-158

  Abstract Full Text for PDF

• Effect of Corporate Retained Income Taxation System on Corporate Investment, Dividend and Wage Increase －Focusing on the Corporate Earnings Circulation Taxation System－

  LEE, Yong Ju

  19(6) 215-244

  Abstract Full Text for PDF

• How Did Dividend Boosting Tax Policy Affect Stock Price?

  Youngdo Hong

  16(2) 231-260

  Abstract Full Text for PDF

• The Dividend Payout and Analysts' Optimistic Forecasts Bias

  HyeJeong Nam

  13(1) 189-219

  Abstract Full Text for PDF

• The Effect of Foreign Investment on Dividend Payments of KOSDAQ Firms

  Chung, Won-Sub , Mun Soo Choi , Byung-Oak Kim

  12(3) 345-374

  Abstract Full Text for PDF