Capital Gains Tax Realizations and Tax Rates: New Evidence from Time Series

Posted: 6 Mar 2001

See all articles by Matthew J. Eichner

Matthew J. Eichner

Board of Governors of the Federal Reserve System

Todd M. Sinai

University of Pennsylvania - The Wharton School; National Bureau of Economic Research (NBER)

Abstract

Using data from the 1986 through 1997 period, we update the time series evidence on the response of capital gains realizations to tax rates. In general, we find higher long-run elasticities than reported in many previous studies, but the estimates decrease substantially when the influence of 1986 is effectively removed. We explore several explanations for a diminished behavioral response in the period following fundamental tax reform, finding some suggestive evidence that the response may be dulled in part by a succession of rate changes in a relatively short period and the increasing role of mutual funds in households' portfolios.

Suggested Citation

Eichner, Matthew J. and Sinai, Todd M., Capital Gains Tax Realizations and Tax Rates: New Evidence from Time Series. Available at SSRN: https://ssrn.com/abstract=240610

Matthew J. Eichner (Contact Author)

Board of Governors of the Federal Reserve System ( email )

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Todd M. Sinai

University of Pennsylvania - The Wharton School ( email )

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HOME PAGE: http://real.wharton.upenn.edu/~sinai

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