Retrospective Capital Gains Taxation
27 Pages Posted: 28 Jun 2004 Last revised: 20 Aug 2022
Date Written: December 1988
Abstract
This paper presents a new approach to the taxation of capital gains that eliminates the deferral advantage present under current realization-based systems, along with the lock-in effect and tax arbitrage possibilities associated with this deferral advantage. The new approach also taxes capital gains only upon realization but, by effectively charging 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 one 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.
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
By Jeremy Bulow and Lawrence H. Summers
-
Fundamental Tax Reform in the Netherlands
By Sijbren Cnossen and A. Lans Bovenberg