Retrospective Capital Gains Taxation

Authors

  • Alan J. Auerbach University of Pennsylvania

DOI:

https://doi.org/10.1016/1057-0810(91)90051-Y

Abstract

This paper presents a new approach to the taxation of capital gains that eliminates the deferral advantage of realization-based systems, along with the lock- in effect and tax-arbitrage possibilities associated with this deferral advantage. The new method still taxes capital gains only upon realization but, effectively by charg- ing interest on past gains when realization finally occurs, eliminates the incentive to defer such realization. Unlike a similar scheme suggested previously by Vickrey, the present method does not require knowledge of the potentially unobservable pattern of gains over time. It thus is applicable to a very broad range of capital assets. The American EconomicReview, Vol. 81, No. 1(March 1991), pp. 167-178. (Reprinted with permission of the American Economic Association.)

Published

1991-12-30

How to Cite

Auerbach, A. J. (1991). Retrospective Capital Gains Taxation. Financial Services Review, 1(2), 184. https://doi.org/10.1016/1057-0810(91)90051-Y

Issue

Vol. 1 No. 2 (1991): Financial Services Review

Section

Abstracts of Articles on Individual Financial Management

License

Copyright (c) 1991 JAI Press Inc.

Creative Commons License

This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.

Author(s) retain copyright and grant the Journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution-NonCommercial 4.0 International License that allows to share the work with an acknowledgment of the work's authorship and initial publication in this Journal.

This license allows the author to remix, tweak, and build upon the original work non-commercially. The new work(s) must be non-commercial and acknowledge the original work.