Preferential Timing and Income Taxation
14 Pages Posted: 4 Aug 2013
Date Written: July 24, 2013
I show that the value of preferential taxation of asset returns under an income tax that extends to property income is (a) strictly increasing in the taxpayer's marginal rate if the preference takes the form of a preferential rate; but that (b) it attains some maximum at a marginal rate between 0.5 and 1 if the preference takes the form of favorable timing. Disadvantageous timing has exactly the opposite properties.
Keywords: tax deferral, preferential taxation, taxation and valuation, tax timing, capital income taxation, tax incentives
JEL Classification: D80, G11, H20, H21, H24, H25, K34
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