Retrospective Capital Gains Taxation in a Dynamic Stochastic World
We analyze Auerbach´s (1991) proposal of a retrospective capital gains tax, which is equivalent to an accrual tax on an ex ante basis. Using a continuous-time model with stochastic interest rates and serially correlated asset returns, we prove that such an equivalence still holds. This means that in a more realistic setting the realization-based system requires no ad hoc adjustment for equivalence to hold.
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Volume (Year): 66 (2010)
Issue (Month): 3 (September)
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- Auerbach, Alan J, 1991.
"Retrospective Capital Gains Taxation,"
American Economic Review,
American Economic Association, vol. 81(1), pages 167-178, March.
- Alworth, Julian & Arachi, Giampaolo & Hamaui, Rony, 2003. ""What's Come to Perfection Perishes*": Adjusting Capital Gains Taxation in Italy," National Tax Journal, National Tax Association, vol. 56(1), pages 197-219, March.
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