Retrospective Capital Gains Taxation
This paper presents a new approach to the taxation of capital gains that eliminates the deferral advantage of realization-based systems, along with the lock-in effect and tax-arbitrage possibilities associated with this deferral advantage. The new method still taxes capital gains only upon realization, but effectively by charging interest on past gains when realization finally occurs, eliminates the incentive to defer such realization. Unlike a similar scheme suggested previously by William Vickrey, the present method does not require knowledge of the potentially unobservable pattern of gains over time. It, thus, is applicable to a very broad range of capital assets. Copyright 1991 by American Economic Association.
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Volume (Year): 81 (1991)
Issue (Month): 1 (March)
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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.:
- Joseph E. Stiglitz, 1968.
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Cowles Foundation Discussion Papers
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- Bulow, Jeremy I & Summers, Lawrence H, 1984.
"The Taxation of Risky Assets,"
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University of Chicago Press, vol. 92(1), pages 20-39, February.
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"Optimal Capital-Gains Taxation under Limited Information,"
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- Green, Jerry & Sheshinski, Eytan, 1978. "Optimal Capital-Gains Taxation Under Limited Information," Scholarly Articles 3210340, Harvard University Department of Economics.
- Alan J. Auerbach, 1981. "Evaluating the Taxation of Risky Assets," NBER Working Papers 0806, National Bureau of Economic Research, Inc.
- William Vickrey, 1939. "Averaging of Income for Income-Tax Purposes," Journal of Political Economy, University of Chicago Press, vol. 47, pages 379-379.
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