Ex-Post Equivalence under Capital Gains Taxation
In this article, we analyze a state-contingent tax on capital gains. We start by focusing on Auerbach's (1991) retrospective capital gains tax device. Although this system is equivalent to an accrual method from an ex-ante perspective, it is not on an ex-post basis. As recognized by Auerbach, this causes a fairness problem. To overcome this limitation, we follow Zhu (1992) and design a state-contingent tax rule. As will be proven, state-contingent taxation can modify the risk profile of assets and also ensure ex-post equivalence.
Volume (Year): 32 (2012)
Issue (Month): 2 ()
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- Green, Jerry R. & Sheshinski, Eytan, 1979. "Approximating the efficiency gain of tax reforms," Journal of Public Economics, Elsevier, vol. 11(2), pages 179-195, March.
- Francesco Menoncin & Paolo Panteghini, 2009.
"Retrospective Capital Gains Taxation in the Real World,"
CESifo Working Paper Series
2674, CESifo Group Munich.
- Francesco Menoncin & Paolo Panteghini, 2009. "Retrospective Capital Gains taxation in the real world," Working Papers 0910, University of Brescia, Department of Economics.
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