1 The variety of dividend tax rate is one of the reasons that cause the variety of stock pricing; it also induces the arbitrage opportunities and additional trading around ex-date.

2 Dividend Tax System is always been one of the most interesting and controversial topics in the western academic world.

3 As the important component of individual tax, dividend tax has naturally become the focus of the reform.

4 Further, I analyze other factors that affect the dividend. We have drawn the following conclusions:Overall, the size of dividend tax obviously influences the cash dividend of the listed companies.

5 Through the academic history, there have been three major theories on the economic effects of dividend tax: the irrelevance theory, the traditional theory and the tax capitalization theory.

6 These three theoretical schools have different views on whether dividend tax should be cancelled or integrated with corporate tax.

7 The paper reviews the main content of the three schools and the relevant empirical evidence, and provides some suggestion on the reform of China dividend tax reform.

8 It is to say, tax effect of dividend policies exists. The introduction of dividend tax affects the investors'real income and the managers'earning, thereby affecting the dividend policy.