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on Public Finance |
By: | Schjelderup, Guttorm (Dept. of Business and Management Science, Norwegian School of Economics); Zoutman, Floris T. (Dept. of Business and Management Science, Norwegian School of Economics) |
Abstract: | We study how wealth taxes affect portfolio choice in the presence of a realization-based tax on capital gains. We develop a two-period model with heterogeneous investors. Capital gains taxations distort portfolio choice by providing an incentive to postpone realization.We show that a wealth tax levied alongside the capital gains tax can eliminate this distortion for all investors. We develop an optimal-tax model that trades of equity gains from the capital-gains and wealth tax to efficiency losses related to intertemporal and portfolio choice, and derive an elasticity-based empirical criterion for the desirability of a wealth tax. |
Keywords: | Wealth Tax; Capital-gains Tax; Dividend Tax; Lock-in Effect; Capital-market Efficiency |
JEL: | D14 G51 H21 H24 M21 |
Date: | 2024–09–30 |
URL: | https://d.repec.org/n?u=RePEc:hhs:nhhfms:2024_010 |
By: | Oriol Carbonell-Nicolau; Humberto Llavador |
Abstract: | Income inequality, bipolarization, and polarization more generally are critical issues that have drawn the attention of economists, policymakers, and social scientists. While related, these phenomena present important conceptual differences. This paper studies the role of nonlinear income taxation as a mechanism for income inequality reduction and depolarization. We introduce a novel and intuitive variance-sensitive axiom defined on perfectly bimodal income distributions, an axiom that serves as the basis for the definition of a social preorder, which is used as the main normative criterion for the evaluation of income distributions and encompasses various inequality and (bi)polarization measures. In an endogenous income framework, we fully characterize the conditions under which income tax schedules effectively reduce income inequality and (bi)polarization, as measured by a wide range of metrics. We show that such tax schedules are necessarily progressive and characterize subsets of tax policies that simultaneously achieve a universal reduction in inequality and (bi)polarization. These results underscore the critical role of progressive taxation in mitigating economic disparities and fostering a more balanced economic landscape. |
Keywords: | Income inequality, income polarization, Progressive Taxation, social preorder, Lorenz criterion, endogenous income |
JEL: | D31 D63 E62 H23 H24 D71 |
Date: | 2024–09 |
URL: | https://d.repec.org/n?u=RePEc:bge:wpaper:1459 |
By: | Tom Zawisza; Sarah Perret; Pierce O’Reilly; Antonia Ramm |
Abstract: | This paper explores tax arbitrage incentives and behaviours in OECD countries, and their implications for tax systems more broadly. It focuses on how OECD tax systems might encourage business owners, in particular owners of unincorporated businesses and owner-managers of closely held incorporated businesses, to minimise their tax burdens through tax arbitrage. The paper finds that tax incentives to incorporate and earn capital income through corporations have increased in the last two decades. It shows that there has been an increase in incorporated businesses in many OECD countries, which has been partly driven by tax factors. The paper also finds that, in many countries, a combination of tax system features – related to corporate, dividend, capital gains, gift and inheritance taxation – provide particularly strong incentives to retain earnings inside corporations. |
Date: | 2024–10–07 |
URL: | https://d.repec.org/n?u=RePEc:oec:ctpaaa:70-en |
By: | Congressional Budget Office |
Abstract: | CBO and the staff of the Joint Committee on Taxation (JCT) have estimated the effects on revenues and spending of many of the President’s budgetary proposals. The proposals that the agencies were able to analyze would increase revenues by $2.8 trillion over the 2025–2034 period (in relation to the amounts projected in CBO’s baseline). About a third of that estimated increase would stem from raising the corporate income tax rate from 21 percent to 28 percent. |
JEL: | H30 H50 H51 H60 H61 H68 |
Date: | 2024–10–04 |
URL: | https://d.repec.org/n?u=RePEc:cbo:report:60438 |