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The Effects of Taxation on the Selling of Corporate Stock and the Realization of Capital Gains: Comment*

* This paper is a replication of an original study

Author

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  • Joseph J. Minarik

Abstract

In a recent article in this Journal, Martin S. Feldstein, Joel Slemrod, and Shlomo Yitzhaki [FSY] find that marginal tax rates have a powerful effect on the realization of long-term capital gains on corporate stock, and project that a tax cut similar to that enacted in 1978 should triple realizations and increase tax revenues. This comment finds that an econometric error caused FSY to overstate the elasticity of realizations to tax rates by a factor of 51. Corrected and refined estimates show that tax rate cuts will not increase realizations sufficiently to increase tax revenues.

Suggested Citation

  • Joseph J. Minarik, 1984. "The Effects of Taxation on the Selling of Corporate Stock and the Realization of Capital Gains: Comment," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 99(1), pages 93-110.
    • Handle: RePEc:oup:qjecon:v:99:y:1984:i:1:p:93-110.
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    File URL: http://hdl.handle.net/10.2307/1885722
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    Citations

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    Cited by:

    1. Mariger, Randall P., 1995. "Taxes, Capital Gains Realizations, and Revenues: A Critical Review and Some New Results," National Tax Journal, National Tax Association, vol. 48(3), pages 447-62, September.
    2. Joel Slemrod & William Shobe, 1990. "The Tax Elasticity of Capital Gains Realizations: Evidence from a Panel of Taxpayers," NBER Working Papers 3237, National Bureau of Economic Research, Inc.
    3. Tim Dowd & Robert McClelland & Athiphat Muthitacharoen, 2012. "New Evidence on the Tax Elasticity of Capital Gains: Working Paper 2012-09," Working Papers 43334, Congressional Budget Office.
    4. James E. Long, 1989. "The Effect of the 1986 Tax Act On Personal Interest Deductions," Public Finance Review, , vol. 17(3), pages 243-263, July.
    5. Ricardo O. Cavalcanti & Andrés Erosa, 2007. "A theory of capital gains taxation and business turnover," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 32(3), pages 477-496, September.
    6. William T. Bogart & William M. Gentry, 1993. "Capital Gains Taxation and Realizations: Evidence from Interstate Comparisons," NBER Working Papers 4254, National Bureau of Economic Research, Inc.

    Replication

    This item is a replication of:
  • Martin Feldstein & Joel Slemrod & Shlomo Yitzhaki, 1980. "The Effects of Taxation on the Selling of Corporate Stock and the Realization of Capital Gains," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 94(4), pages 777-791.

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    1. The Effects of Taxation on the Selling of Corporate Stock and the Realization of Capital Gains: Comment (QJE 1984) in ReplicationWiki

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