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Capital Gains Taxation in an Economy with an "Austrian Sector"

1983
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Release : 1983
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Book Synopsis Capital Gains Taxation in an Economy with an "Austrian Sector" by :

Download or read book Capital Gains Taxation in an Economy with an "Austrian Sector" written by . This book was released on 1983. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines the effects of a proportional capital gains tax in an economy with an Austrian sector (with wine and trees) and an ordinary sector. We analyze the effect of capital gains taxation (on both an accrual and a realization basis) on the efficiency with which resources are used within the Austrian sector. Since time is the only input which can be varied in the Austrian sector this amounts to looking at the effect of capital gains taxation on the harvesting time or selling time of assets. Accrual taxation decreases the selling time of Austrian assets. Realization taxation decreases the selling time of some Austrian assets and leaves it unchanged for others. Inflation further reduces the selling time of assets taxed on an accrual basis; often, but not always, inflation increases .the selling time of Austrian assets taxed on a realization basis. These results suggest that the capital gains tax can reduce the holding period of an asset. However, there is a sense in which such taxes (at least when levied on a realization basis) discourage transactions and increase holding periods. It is never profitable to change the ownership of an Austrian asset between the time of the original investment and the ultimate harvesting of the asset for final use. We examine the effect of capital gains taxation on the efficiency of the allocation of investment between sectors. No neutrality principles emerge when ordinary investment income is taxed at the same rate as capital gains income. We also analyze the effect of the special tax treatment of capital gains at death and find that the current U.S. tax system, under which capital gains taxes are waived at death, encourages investors to hold assets longer than they otherwise would.

Property and income taxation in an economy with an Austrian sector

1985
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Release : 1985
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Book Synopsis Property and income taxation in an economy with an Austrian sector by : Daniel J. Kovenock

Download or read book Property and income taxation in an economy with an Austrian sector written by Daniel J. Kovenock. This book was released on 1985. Available in PDF, EPUB and Kindle. Book excerpt:

Notes on the Effect of Capital Gains Taxation on Non-Austrian Assets

1985 Capital gains tax
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Release : 1985
Genre : Capital gains tax
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Book Synopsis Notes on the Effect of Capital Gains Taxation on Non-Austrian Assets by : Daniel J. Kovenock

Download or read book Notes on the Effect of Capital Gains Taxation on Non-Austrian Assets written by Daniel J. Kovenock. This book was released on 1985. Available in PDF, EPUB and Kindle. Book excerpt: This paper is an attempt to assess the effect of capital gains taxation on non-Austrian assets, such as claims to profits of continuing enterprises. As compared to taxation on an accrual basis, the capital gains tax discourages sales of appreciated assets. This is the "lock-in" effect. Because assets subject to capital gains taxation are generally held a long time, conventional estimates suggest that the effective rate of capital gains taxation is low. We contend that conventional estimates could seriously underestimate the effective rate of capital gains taxation because they ignore uncertainty. We construct a model which allows us to calculate the value of being able to actively manage a portfolio and use this model to calculate the effective rate of capital gains taxation. For several plausible parameter values the effective rate is significantly higher than estimates under certainty. We also discuss some of the ways in which the lock-in effect may distort the allocation of investment funds and the efficient workings of the capital market

Notes on the Effect of Capital Gains Taxation on Non-Austrian Assets

2008
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Release : 2008
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Book Synopsis Notes on the Effect of Capital Gains Taxation on Non-Austrian Assets by : Dan Kovenock

Download or read book Notes on the Effect of Capital Gains Taxation on Non-Austrian Assets written by Dan Kovenock. This book was released on 2008. Available in PDF, EPUB and Kindle. Book excerpt: This paper is an attempt to assess the effect of capital gains taxation on non-Austrian assets, such as claims to profits of continuing enterprises. As compared to taxation on an accrual basis, the capital gains tax discourages sales of appreciated assets. This is the quot;lock-inquot; effect. Because assets subject to capital gains taxation are generally held a long time, conventional estimates suggest that the effective rate of capital gains taxation is low. We contend that conventional estimates could seriously underestimate the effective rate of capital gains taxation because they ignore uncertainty. We construct a model which allows us to calculate the value of being able to actively manage a portfolio and use this model to calculate the effective rate of capital gains taxation. For several plausible parameter values the effective rate is significantly higher than estimates under certainty. We also discuss some of the ways in which the lock-in effect may distort the allocation of investment funds and the efficient workings of the capital market.

The Labyrinth of Capital Gains Tax Policy

2010-12-01 Business & Economics
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Release : 2010-12-01
Genre : Business & Economics
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Book Rating : 955/5 ( reviews)

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Book Synopsis The Labyrinth of Capital Gains Tax Policy by : Leonard E. Burman

Download or read book The Labyrinth of Capital Gains Tax Policy written by Leonard E. Burman. This book was released on 2010-12-01. Available in PDF, EPUB and Kindle. Book excerpt: Few issues in tax policy are as divisive as the capital gains tax. Should capital gains--the increase in value of assets such as stocks or businesses--be taxed at all? If so, when should they be taxed--when they are earned, or when they are realized? Should taxes be adjusted for inflation? And should gains be taxed at both the individual and corporate levels? In this book, Leonard Burman cuts through the political rhetoric to present the facts about capital gains. He begins by explaining the complex rules that govern the taxation of capital gains, examines the kinds of assets that produce them, and the factors that can lead to gains or losses. He then reviews the effects of capital gains taxation on saving and investment and considers the arguments for and against indexing capital gains taxes for inflation, as well as other options for altering the current system.

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