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Retrospective Capital Gains taxation in the real world

  • Francesco Menoncin
  • Paolo Panteghini

In this article, 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 systems requires no ad hoc adjustment for equivalence to hold.

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Paper provided by University of Brescia, Department of Economics in its series Working Papers with number 0910.

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Date of creation: 2009
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Handle: RePEc:ubs:wpaper:0910
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