Inflation and the Excess Taxation of Capital Gains on Corporate Stock
The present study shows that in 1973 individuals paid nearly $500 million of extra tax on corporate stock capital gains because of the distorting effect of inflation. A detailed analysis shows that the distortion was greatest for middle income sellers of corporate stock. In 1973, individuals paid capital gains tax on more than $4.5 billion of nominal capital gains on corporate stock. If the costs of these shares are adjusted for the increases in the consumer price level since they were purchased, the $4.5 billion nominal gain becomes a real capital loss of nearly $1 billion. As a result of this incorrect measurement of capital gains, individuals with similar real capital gains were subject to very different total tax liabilities. These findings are based on a new body of official tax return data on individual sales of corporate stock.
|Date of creation:||Feb 1978|
|Date of revision:|
|Publication status:||published as Feldstein, Martin and Slemrod, Joel. "Inflation and the Excess Taxation of Capital Gains on Corporate Stock." National Tax Journal, Vol. XXXI, No.2, ( June 1978), pp. 107-118.|
|Contact details of provider:|| Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.|
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- Sheshinski, Eytan & Feldstein, Martin & Green, Jerry & Auerbach, Alan, 1978.
"Inflation and Taxes in a Growing Economy with Debt and Equity Finance,"
3203645, Harvard University Department of Economics.
- Martin Feldstein & Jerry Green & Eytan Sheshinski, 1983. "Inflation and Taxes in a Growing Economy with Debt and Equity Finance," NBER Chapters, in: Inflation, Tax Rules, and Capital Formation, pages 44-60 National Bureau of Economic Research, Inc.
- Martin Feldstei & Jerry Green & Eytan Sheshinski, 1978. "Inflation and Taxes in a Growing Economy with Debt and Equity Finance," NBER Chapters, in: Research in Taxation, pages 53-70 National Bureau of Economic Research, Inc.
- Feldstein, Martin S & Green, Jerry R & Sheshinski, Eytan, 1978. "Inflation and Taxes in a Growing Economy with Debt and Equity Finance," Journal of Political Economy, University of Chicago Press, vol. 86(2), pages S53-70, April.
- Martin Feldstein, 1978.
"The Welfare Cost of Capital Income Taxation,"
in: Research in Taxation, pages 29-51
National Bureau of Economic Research, Inc.
- Peter A.Diamond, 1973.
"Inflation and the Comprehensive Tax Base,"
98, Massachusetts Institute of Technology (MIT), Department of Economics.
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