Advanced Search
MyIDEAS: Login

The perception of income taxation on risky investments: An experimental analysis of different methods of loss compensation

Contents:

Author Info

  • Fochmann, Martin
  • Kiesewetter, Dirk
  • Sadrieh, Abdolkarim

Abstract

We analyze the effect of income taxation with limited loss deduction on investment decisions. An experiment with five treatments was conducted, one without taxation as a reference and four with taxation and limited loss compensation. The participants' task was to repeatedly choose one out of two risky investment opportunities. Earnings from the experiment depended on the payoffs of the participant's investments. Our results reveal that subjects do not only look at gross payoffs but also take taxes into account in their decisions. The experimental setup made sure that a rational participant who correctly perceives the effect of the different loss offset rules would take exactly the same decisions with and without taxation. Nevertheless, we find out that individuals tend to overestimate the value of loss compensation rules which offer less than a complete loss offset. --

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://econstor.eu/bitstream/10419/30836/1/614992249.pdf
Download Restriction: no

Bibliographic Info

Paper provided by arqus - Arbeitskreis Quantitative Steuerlehre in its series arqus Discussion Papers in Quantitative Tax Research with number 92.

as in new window
Length:
Date of creation: 2009
Date of revision:
Handle: RePEc:zbw:arqudp:92

Contact details of provider:
Web page: http://www.arqus.info/

Related research

Keywords:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Peter Brooks & Horst Zank, 2005. "Loss Averse Behavior," Journal of Risk and Uncertainty, Springer, vol. 31(3), pages 301-325, December.
  2. Rupert Sausgruber & Jean-Robert Tyran, 2008. "Tax Salience, Voting, and Deliberation," Discussion Papers 08-21, University of Copenhagen. Department of Economics.
  3. Jeremy Clark, 2002. "House Money Effects in Public Good Experiments," Experimental Economics, Springer, vol. 5(3), pages 223-231, December.
  4. Ruffle, Bradley J., 2005. "Tax and subsidy incidence equivalence theories: experimental evidence from competitive markets," Journal of Public Economics, Elsevier, vol. 89(8), pages 1519-1542, August.
  5. Lucy Ackert & Narat Charupat & Bryan Church & Richard Deaves, 2006. "An experimental examination of the house money effect in a multi-period setting," Experimental Economics, Springer, vol. 9(1), pages 5-16, April.
  6. Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer, vol. 10(2), pages 171-178, June.
  7. Schmidt, Ulrich & Traub, Stefan, 2002. " An Experimental Test of Loss Aversion," Journal of Risk and Uncertainty, Springer, vol. 25(3), pages 233-49, November.
  8. Rupert Sausgruber & Jean-Robert Tyran, . "Testing the Mill hypothesis of fiscal illusion," Discussion Papers 04-18, University of Copenhagen. Department of Economics, revised Sep 2004.
  9. Fujii, Edwin T & Hawley, Clifford B, 1988. "On the Accuracy of Tax Perceptions," The Review of Economics and Statistics, MIT Press, vol. 70(2), pages 344-47, May.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Martin Jacob & Andreas Pasedag & Franz W. Wagner, 2011. "Werden niedrige Steuersätze in Osteuropa durch Verzicht auf Verlustverrechnung erkauft?," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 12(1), pages 72-91, 02.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:zbw:arqudp:92. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (ZBW - German National Library of Economics).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.