Tax Evasion and Capital Gains Taxation

16 Pages Posted: 5 Jul 2004

See all articles by James M. Poterba

James M. Poterba

National Bureau of Economic Research (NBER); Massachusetts Institute of Technology (MIT) - Department of Economics

Date Written: 1987

Abstract

This paper uses time-series data to investigate how changes in capital gains tax rates affect taxpayer compliance. It finds that a one percent increase in the marginal tax rate reduces voluntary compliance by between one half and one percent. These results confirm the findings of previous studies based on individual household data. They also suggest that at least one quarter of the observed capital gain realization response to changes in marginal tax rates is due to changes in reporting behavior, rather than portfolio behavior.

Suggested Citation

Poterba, James M., Tax Evasion and Capital Gains Taxation (1987). NBER Working Paper No. w2119. Available at SSRN: https://ssrn.com/abstract=227385

James M. Poterba (Contact Author)

National Bureau of Economic Research (NBER) ( email )

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Massachusetts Institute of Technology (MIT) - Department of Economics ( email )

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617-253-1330 (Fax)

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