Capital gains, negative gearing and effective tax rates on income from rented houses in Australia
AbstractThis paper reports estimates of effective tax rates on rental property income in Australia. We consider three capital gains tax regimes - the current Australian system, that which prevailed between 1985 and 1999 and a realisation tax that attempts to mimic an accruals tax. We report estimates for each regime in two scenarios - slow anticipated real capital gains and very rapid unanticipated real capital gains. Our results suggest that negative gearing should be retained and capital gains taxation reformed to approximate an accruals tax. We argue that this desirable package would be no harder to administer than the current regime.
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Bibliographic InfoPaper provided by The Australian National University, Arndt-Corden Department of Economics in its series Departmental Working Papers with number 2004-06.
Length: 30 pages
Date of creation: Jun 2004
Date of revision:
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More information through EDIRC
capital gains tax; interest deductibility; accruals; realizations; Australian tax system;
Find related papers by JEL classification:
- H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
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- Green, Jerry R & Sheshinski, Eytan, 1978.
"Optimal Capital-Gains Taxation under Limited Information,"
Journal of Political Economy,
University of Chicago Press, vol. 86(6), pages 1143-58, December.
- Green, Jerry & Sheshinski, Eytan, 1978. "Optimal Capital-Gains Taxation Under Limited Information," Scholarly Articles 3210340, Harvard University Department of Economics.
- Alan J. Auerbach, 1991.
"Retrospective Capital Gains Taxation,"
NBER Working Papers
2792, National Bureau of Economic Research, Inc.
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