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Accrued Gains are not Income: An Administratively Simple Rollover Treatment for Capital Gains Taxation

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  • Raymond L. Richman
  • Jesse T. Richman
  • Howard B. Richman

Abstract

This paper presents a definition of income that rejects both the BEA and Haig-Simons definitions concerning capital gains. Specifically, capital gains represent future income unless brought to the present by consumption of the gain. We demonstrate that the rollover treatment implied by this definition ends double-taxation, under-taxation, lock-in of capital, excessive incentives to consume capital, and other economic distortions. Finally, we detail an administratively-simple deferred gain account rule for the rollover treatment which would require that taxpayers only track one additional item of information – the total deferred gain that would be rolled over into the next tax year.

Suggested Citation

  • Raymond L. Richman & Jesse T. Richman & Howard B. Richman, 2021. "Accrued Gains are not Income: An Administratively Simple Rollover Treatment for Capital Gains Taxation," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 12(12), pages 1-1, December.
    • Handle: RePEc:ibn:ijefaa:v:12:y:2021:i:12:p:1
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    References listed on IDEAS

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    1. Stiglitz, Joseph E, 1990. "Symposium on Bubbles," Journal of Economic Perspectives, American Economic Association, vol. 4(2), pages 13-18, Spring.
    2. Lei, Vivian & Noussair, Charles & Plott, Charles R., 2002. "Asset Bubbles and Rationality: Additional Evidence from Capital Gains Tax Experiments," Working Papers 1137, California Institute of Technology, Division of the Humanities and Social Sciences.
    3. Tomislav Globan & Tihana Skrinjaric, 2020. "Penny wise and pound foolish: capital gains tax and trading volume on the Zagreb Stock Exchange," Public Sector Economics, Institute of Public Finance, vol. 44(3), pages 299-329.
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    More about this item

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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