do high taxes lock in capital gains evidence from a dual income tax system the purpose of this paper is to study whether investors willingness to realize capital gains falls when the marginal tax rate on capital gains is raised we use a rich register based panel data set covering almost 8 of the swedish population the results indicate that a 10 increase in capital gains tax rate reduces the number of realizations of capital gains with 8 7 and the realized amount given the decision to realize with 1 9 in addition we find that wealthy individuals seem to respond more to changes in capital gains tax rates than less wealthy

an experimental examination of labor supply and work intensities estimated negative substitution effects on work hours question the empirical validity of the classical labor supply model estimates are reconciled by allowing a dual choice of hours and effort for piecerate workers in such a model these negative substitution effects result from substituting on and off the job leisure we test our model using controlled experimentation on human subjects these experiments while not naturally occurring environments represent real economic choices and can generate data unavailable elsewhere e g effort data the results support our model and they have implications both for labor management and for empirical research focusing only on the hours choice the classical static model of the labor leisure choice offers positive compensated wage effects on hours of work as its main testable implication previous attempts to test this hypothesis with field data have cast doubt on the empirical validity of the static labor supply model due to the frequency of negative estimated compensated wage elasticities a limitation of the model is that it views the choice of hours of work as the only

estimating willingness to pay for a cycling event using a willingness to travel approach abstract this study examines the monetary value of nonmarket benefits to participants of an active sport tourism event such as happiness and pride from participating in an event willingness to travel wtt greater distances for future events is assessed and converted into willingness to pay wtp estimates using travel costs using survey data from the 2014 and 2015 blood sweat gears bike ride the intended visitation models show that changes in travel cost have a significant negative effect wtp to revisit the event was between 41 and 57 the likelihood of return visit decreases as travel costs increase indicating that wtp estimates are internally valid wtp estimates stemming from two years of data collection are stable suggesting that they are also temporally reliable this study demonstrated the feasibility of using stated preference wtt questions to assign a monetary value to nonmarket benefits of active sport tourists

combining contingent valuation and travel cost data for the valuation of non market goods the travel cost method tcm has long been used to infer the economic value of nonmarket resources and public goods more recently contingent valuation cvm survey methods have gained popularity for eliciting these values here cvm survey responses are combined with tcm data on actual market behavior to estimate jointly both the parameters of the underlying utility function and its corresponding ordinary demand function this is a prototypical empirical example of a new modeling strategy variants of which should prove useful in many applications especially where reliance on a single valuation method is undesirable

income shifting within a dual income tax system evidence from the finnish tax reform of 1993 dual income tax systems can suffer from income that shifts from progressively taxed labour income to capital income which is taxed at a lower flat rate this paper empirically examines the 1993 finnish dual income tax reform which radically reduced the marginal tax rates on capital income for some but not all taxpayers we measure how overall taxable income and the relative shares of capital income and labour income reacted to the reform we find that the reform led to a small positive impact on overall taxable income but part of the positive response was probably offset by income shifting among the self employed

the timing of antitrust effects on pricing this paper extends recent results suggesting a deterrent effect of antitrust cases on price cost margins of firms involved in a sample of 288 firms a negative effect of price fixing indictments on margins is found an effect which erodes over time some weak support is given for the view that a deterrent effect is reduced if a conviction is not obtained finally an attempt to examine the response of firms to stages of a case suggests that the bulk of the antitrust effect on pricing may occur at the onset of investigation prior to actual filing of the case

measuring permanent responses to capital gains tax changes in panel data the authors use panel data and information about differences in state tax rates to separate the effects of transitory and permanent tax rate changes on capital gains realizations behavior the estimated effect of permanent change is substantially smaller than the effect of transitory change the difference is even larger than differences between estimates from past micro data studies which have primarily measured the transitory effect and time series studies which have primarily measured the permanent effect the authors results resolve a long standing conflict between micro data and time series studies of how marginal tax rates affect capital gains realizations behavior copyright 1994 by american economic association

the effects of taxation on the selling of corporate stock and the realization of capital gains this study provides the first econometric analysis of the effect of taxation on the realization of capital gains the analysis thus extends and complements the earlier study by feldstein and yitzhaki 1978 of the effect of taxation on the selling of corporate stock the present analysis using a large new body of data obtained from individual tax returns supports the earlier finding that corporate stock sales are quite sensitive to tax rates and then shows that the effect on the realization of capital gains is even stronger

do after tax returns affect mutual fund inflows abstract this paper explores the relationship between the after tax returns that taxable investors earn on equity mutual funds and the subsequent cash inflows to these funds previous studies have documented that funds with high pretax returns attract greater inflows this paper presents evidence based on a large sample of retail equity mutual funds over the period 1993 1999 that after tax returns have more explanatory power than pretax returns in explaining inflows in addition funds with large overhangs of unrealized capital gains experience smaller inflows all else equal than funds without such unrealized gains a large capital gain overhang discourages both gross fund inflows and gross outflows but the inflow effect dominates the outflow effect

capital gains realizations of the rich and sophisticated this paper attempts to bring theoretical and empirical research on capital gains realization behavior closer together by considering whether investors who appear to engage more in strategic tax avoidance activity also respond differently to tax rates we find that such investors exhibit significantly smaller responses to permanent tax rate changes than other investors put another way a larger part of their response to capital gains tax rates reflects timing consistent with their closer adherence to tax avoidance strategies emphasizing arbitrage based on tax rate differentials this finding holds for two alternative specifications of realization behavior one of which suggests larger permanent responses to capital gains tax rates than those of previous panel studies this abstract was borrowed from another version of this item

capital gains taxes and asset prices capitalization or lock in this paper demonstrates that the equilibrium impact of capital gains taxes reflects both the capitalization effect i e capital gains taxes decrease demand and the lock in effect i e capital gains taxes decrease supply depending on time periods and stock characteristics either effect may dominate using the taxpayer relief act of 1997 as our event we find evidence supporting a dominant capitalization effect in the week following news that sharply increased the probability of a reduction in the capital gains tax rate and a dominant lock in effect in the week after the rate reduction became effective this paper jointly tests two effects of capital gains taxation on equity trading a demand side capitalization effect and a supply side lock in effect while previous studies have tested these effects separately to the best of our knowledge this is the first study to evaluate them jointly and empirically document the relative dominance of each effect surrounding a change in a tax rate employing an equilibrium approach we show that these effects net tax impact on asset prices is ambiguous evaluating returns and trading volume around the 1997 reduction in the capital gains tax rate we find evidence that the capitalization and the lock in effects jointly affect trading in particular the capitalization effect dominates the lock in effect in the week following an increase in the probability of a reduction in the capital gains tax rate as buyers respond to information that future capital gains tax rates will be lower the lock in effect however dominates the capitalization effect after the rate reduction actually becomes effective taxation is one of the most prevalent market frictions in financial markets affecting investors decisions and distorting the valuation of assets capital gains taxes in particular play an important role in determining an investor s trading strategies and can ultimately affect asset prices because investors

consumption benefits of national hockey league game trips estimated from revealed and stated preference demand data this paper examines the demand for hockey game trips among metropolitan and nonmetropolitan residents of alberta canada using data on both revealed and stated preference game trip behavior from a telephone survey conducted throughout alberta we estimate the effect of ticket prices team quality arena amenities and capacity on the latent demand for national hockey league hockey games we nd that lower ticket prices higher team quality and additional capacity encourage attendance in the status quo scenario consumer surplus per game is 50 for those who had attended hockey games and about 50 less for those who had not attended games exploiting the stated preference data we develop a number of other consumer surplus estimates we also include travel costs in the estimation of the demand function and estimate the full value of the game trip considering both ticket prices and travel costs sold out arenas in calgary and edmonton generate annual consumption bene ts of 40 and 35 million when only ticket prices are used to calculate consumer surplus i e excluding travel costs considering the full price consumer surplus for the calgary flames of 103 per game trip the annual consumption bene ts may be as high as 82 million jel r22 l83 d61

how burdensome are capital gains taxes abstract this paper uses capital gain realization data from individual tax returns to evaluate recent claims that sophisticated portfolio strategies permit investors to avoid capital gains taxes the results suggest important investor heterogeneity twenty percent of taxpayers with capital gains or losses face binding loss offset constraints another significant group of investors evades the capital gains tax prior to recent legislative changes forty percent of capital gains were unreported finally about forty percent of capital gains accrue to investors who report capital gains and face significant tax burdens as the traditional analysis of the capital gains tax suggests

cartels and antitrust the role of fines in deterring violations at the margin the potential benefits of effective antitrust action include both increased economic efficiency through the expansion of output and improved equity through the redistribution of income from monopolies to consumers a large and growing literature is devoted to empirically testing and documenting the economic consequences of antitrust casebringing activity a second empirical literature is focused on the role which economic variables play in the determination of casebringing activity by the united states department of justice 2 what separates these two bodies of literature are the behavioral linkages between anti

capital gains taxation and stock market activity evidence from ipos prior to the tax reform act of 1986 tra 86 long term capital gains were taxed at a lower rate than short term gains presenting investors with an opportunity to increase their after tax return by delaying the sale of appreciated assets until after they qualified for long term status and selling depreciated assets prior to long term qualification using a sample of initial public offerings i find that stocks that appreciated prior to long term qualification exhibit increased volume and decreased returns just after their qualification date while stocks that depreciated prior to long term qualification exhibit these effects just prior to their qualification date it is generally acknowledged that capital gains taxes influence investor behavior slemrod 1982 dyl 1979 chaplinsky and seyhun 1990 and others agree that individuals rationally respond to specific provisions of the tax code in attempting to reduce the tax liability of investment income recently this view has entered the public policy debate concerning the effective date of a proposed capital gains tax cut for example the wall street journal reported that congress has considered making proposed capital gains tax cuts retroactive to avoid possible market disruptions that might come from investors delaying transactions in anticipation of a future effective date wsj february 19 1997 despite the consensus view that capital gains taxes influence investment behavior specific distortions in behavior are difficult to document empirically one reason for the lack of evidence regarding the distortionary effect of capital gains taxes is that it is extremely difficult for researchers to determine the initial cost and the date of purchase of an asset without that information it is impossible for the investigator to know when an investor is trading a longterm or short term asset and whether he is realizing a gain or a loss one class of assets for which it is possible to obtain this information is initial public offerings of common stock ipos by definition ipos are not available for purchase prior to their offer date on the offer date shares are

tax motivated trading by individual investors we study the stock trades of a large number of individual investors to investigate how tax incentives affect the realization of capital gains and losses we compare investors realization behavior in their taxable and tax deferred accounts and thereby identify the effect of taxes on trading decisions we reach four conclusions first we find clear evidence of a lock in effect for capital gains in taxable accounts relative to tax deferred accounts we find evidence of the disposition effect the tendency for investors to hold losses and sell gains in both types of accounts and especially at short holding periods the lock in effect is stronger for large stock transactions than for small ones second we find tax loss selling throughout the calendar year though it is most pronounced in december tax loss trading is more pronounced among investors who have realized capital gains elsewhere in the portfolio during the year third we observe substantial heterogeneity in individual investors propensity to trade controlling for this heterogeneity however does not alter the relation between a stock s past performance and the realization decision finally we find that relatively few investors repurchase stocks that they have sold at a loss even after the 30 day wash sale holding period has expired

what s to know about hypothetical bias in stated preference valuation studies abstract hypothetical bias arises in stated preference valuation studies when respondents report a willingness to pay wtp that exceeds what they actually pay using their own money in laboratory or field experiments although this bias is not found in all stated preference surveys hypothetical wtp typically exceeds the actual value by a factor of two to three unfortunately there is no widely accepted general theory of respondent behaviour that explains hypothetical bias therefore two meta analyses are reviewed to test current hypotheses regarding the causes of this overstatement of wtp and the associated recommendations to mitigate the bias suggestions for future research are made including the development of a general theory

payout taxes and the allocation of investment when corporate payout is taxed internal equity retained earnings is cheaper than external equity share issues if there are no perfect substitutes for equity finance payout taxes may therefore have an effect on the investment of firms high taxes will favor investment by firms who can finance internally using an international panel with many changes in payout taxes we show that this prediction holds well payout taxes have a large impact on the dynamics of corporate investment and growth investment is locked in in profitable firms when payout is heavily taxed thus apart from any level effects payout taxes change the allocation of capital

the deterrent effect of antitrust enforcement in this paper we formulate and test a model of collusive pricing in the presence of antitrust enforcement we show that a cartel s optimal price is likely to be neither the competitive price nor the price that the cartel would set in the absence of antitrust enforcement but rather an intermediate price that depends on the levels of antitrust enforcement efforts and penalties our empirical results reveal that increasing antitrust enforcement in the presence of a credible threat of large damage awards has the deterrent effect of reducing mark ups in the bread industry

using contingent valuation to explore willingness to pay for renewable energy a comparison of collective and voluntary payment vehicles abstract this study uses a split sample dichotomous choice contingent valuation survey of 1574 u s residents to explore willingness to pay wtp for renewable energy under collective and voluntary payment vehicles and under government and private provision of the good we also evaluate the impact of participation expectations on stated wtp we find some evidence that when confronted with a collective payment mechanism respondents state a somewhat higher wtp than when voluntary payment mechanisms are used similarly private provision of the good elicits a somewhat higher wtp than does government provision we also find that contingent valuation responses are strongly correlated with expectations for the wtp of others our results shed light on strategic response behavior and the incentive compatibility of different cv designs and offer practical insight into u s household preferences for how to support renewable energy

do hypothetical and actual marginal willingness to pay differ in choice experiments application to the valuation of the environment abstract in this paper we test the validity of choice experiments with donations for environmental projects in particular we test whether or not there are differences in preferences between a hypothetical and an actual choice experiment our experiments indicate no differences in addition internal tests of validity indicate transitive and stable preferences in both experiments although there are some indications of possible learning effects during the experiment

the elasticity of taxable income with respect to marginal tax rates a critical review this paper critically surveys the large and growing literature estimating the elasticity of taxable income with respect to marginal tax rates using tax return data first we provide a theoretical framework showing under what assumptions this elasticity can be used as a sufficient statistic for efficiency and optimal tax analysis we discuss what other parameters should be estimated when the elasticity is not a sufficient statistic second we discuss conceptually the key issues that arise in the empirical estimation of the elasticity of taxable income using the example of the 1993 top individual income tax rate increase in the united states to illustrate those issues third we provide a critical discussion of selected empirical analyses of the elasticity of taxable income in light of the theoretical and empirical framework we laid out finally we discuss avenues for future research jel h24 h31 j22

the effect of marginal tax rates on taxable income a panel study of the 1986 tax reform act this paper uses a treasury department panel of more than 4 000 taxpayers to estimate the sensitivity of taxable income to changes in tax rates on the basis of a comparison of the tax returns of the same individual taxpayers before and after the 1986 tax reform the analysis emphasizes that the response of taxable income involves much more than a change in the traditional measures of labor supply the evidence shows an elasticity of taxable income with respect to the marginal net of tax rate that is at least one and could be substantially higher the implications for recent tax rate changes are discussed

mitigating hypothetical bias in stated preference data evidence from sports tourism one of the major criticisms of stated preference data is hypothetical bias using a unique dataset of both stated and actual behavior we test for hypothetical bias of stated preference survey responses we consider whether respondents tend to overstate their participatory sporting event behavior ex ante when compared to their actual behavior at different registration fees we find that stated behavior accurately predicts actual behavior at a middle level of respondent certainty overpredicts actual behavior at a lower level of certainty and underpredicts behavior at a higher level of certainty this result suggests that respondent uncertainty corrections can be used to mitigate hypothetical bias and stated preference data can be used to better understand actual behavior in situations where no data exist jel l83 q51 z2

strategic and deterrent pricing responses to antitrust investigations abstract this paper examines the issue of the effects of antitrust on pricing through two empirical studies the first analyzes time series of prices in five industries involved in antitrust cases to determine whether the various stages of the antitrust process influenced pricing behavior some evidence of a deterrent effect is found with real prices lower than their pre investigation level following the conclusion of the case a major part of the pricing reaction occurs prior to the filing of formal charges the second study provides additional evidence of the existence of such a strategic reaction to the onset of investigation through an examination of prices in 23 industries investigated but not charged with price fixing

permanent versus transitory tax effects and the realization of capital gains recent empirical work on captial gains implies that realizations are highly sensitive to marginal tax rates because they are based on cross section data however these estimates cannot distinguish between permanent responses to tax rate changes and the timing of realizations to take advantage of the normal fluctuations in any individual s tax rates over time the purpose of this paper is to distinguish transitory from permanent tax effects by analyzing panel data for taxpayers controlling for permanent and transitory income and other variables the estimates suggest both transitory and permanent effects although the permanent tax rate effect is not significant in all cases

cross base tax elasticity of capital gains abstractthis paper studies the cross base tax elasticity of capital gains realizations to labour income taxes when capital gains are taxed at a separate proportional tax rate using a longitudinal panel of over 265 000 individuals in sweden this paper shows in a regression kink design that labour income taxes affect capital gains realizations in two ways an increase in the marginal labour income tax rate increases the likelihood of realizing capital gains and the amount of realized capital gains one implication of this result is that labour income taxes have a lock out effect but that the magnitude of this effect is smaller than the lock in effect of the actual capital gains tax

tax bunching income shifting and self employment abstract this paper proposes a dynamic extension to saez 2010 bunching formula that allows us to distinguish bunching based on real responses and income shifting we provide direct evidence of income shifting and pronounced bunching in taxable income for the danish self employed if income shifting was neglected in this case we would estimate a taxable income elasticity in the range of 0 43 0 53 and conclude that taxable incomes were highly sensitive to changes in marginal tax rates we show however that more than half of the bunching in taxable income is driven by intertemporal income shifting implying a structural elasticity of 0 14 0 20

adjustment costs firm responses and micro vs macro labor supply elasticities evidence from danish tax records we show that the effects of taxes on labor supply are shaped by interactions between adjustment costs for workers and hours constraints set by firms we develop a model in which firms post job offers characterized by an hours requirement and workers pay search costs to find jobs we present evidence supporting three predictions of this model by analyzing bunching at kinks using danish tax records first larger kinks generate larger taxable income elasticities second kinks that apply to a larger group of workers generate larger elasticities third the distribution of job offers is tailored to match workers aggregate tax preferences in equilibrium our results suggest that macro elasticities may be substantially larger than the estimates obtained using standard microeconometric methods

tax avoidance and the deadweight loss of the income tax traditional analyses of the income tax greatly underestimate deadweight losses by ignoring its effect on forms of compensation and patterns of consumption the full deadweight loss is easily calculated using the compensated elasticity of taxable income to changes in tax rates because leisure excludable income and deductible consumption are a hicksian composite good microeconomic estimates imply a deadweight loss of as much as 30 of revenue or more than ten times harberger s classic 1964 estimate the relative deadweight loss caused by increasing existing tax rates is substantially greater and may exceed 2 per 1 of revenue

retrospective capital gains taxation 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 charging interest on past gains when realization finally occurs eliminates the incentive to defer such realization unlike a similar scheme suggested previously by william 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 copyright 1991 by american economic association

designing choice sets for stated preference methods the effects of complexity on choice consistency abstract we vary the complexity of choice sets used in stated preference methods to evaluate the impact on choice consistency we define five measures of complexity that capture either the amount of information or the correlational structure of information in a choice set using these measures as randomly assigned treatments in a large experiment we analyze the consistency of respondents choices using a heteroskedastic multinomial logit model we find that i all of our measures of choice set complexity affect choice consistency ii changes in the correlational structure of information have the largest impact on choice consistency and iii choice complexity significantly distorts welfare estimates our results confirm economists initial worry that moving from contingent valuation to conjoint methods will increase complexity induced choice inconsistency however our analysis also shows that these negative impacts may be mitigated if precautions are taken at the design and estimation stages of stated preference methods

dividend taxes and income shifting this paper analyzes whether a dividend tax cut for owner managers of closely held corporations encourages income shifting income generation or both we use rich swedish administrative micro data from 2000 to 2011 comprising detailed firm and individual level information we find robust evidence of extensive income shifting across tax bases in response to the 2006 swedish dividend tax cut owner managers of closely held corporations reclassify earned income as dividend income but do not increase total income the response is more pronounced for owner managers with tax incentives and with easier access to income shifting through a high ownership share

state antitrust enforcement in the us and implications for small business entry and relocation this article examines the impact of the important yet little studied state level antitrust enforcement activity on entry and relocation behaviour by small us firms feinberg and husted 2011 have shown that this enforcement especially nonhorizontal cases may be viewed by potential entrants as a negative aspect of the state business climate however they did not pursue a more disaggregate analysis of small firm entry behaviour nor did they investigate different responses between manufacturing wholesaling and retailing firms another related issue is the extent to which state cases filed in tandem with federal investigations have the same impact on establishment entry as do purely independent cases these considerations are dealt with in this article the author uses annual state level data from the statistics of us business to examine entry and relocation reactions to state antitrust enforcement by firms within three small business categories 1 19 employees 20 99 employees 100 499 employees g

active vs passive decisions and crowd out in retirement savings accounts evidence from denmark using 41 million observations on savings for the population of denmark we show that the effects of retirement savings policies on wealth accumulation depend on whether they change savings rates by active or passive choice subsidies for retirement accounts which rely on individuals to take an action to raise savings primarily induce individuals to shift assets from taxable accounts to retirement accounts we estimate that each 1 of government expenditure on subsidies increases total saving by only 1 cent in contrast policies that raise retirement contributions if individuals take no action such as automatic employer contributions to retirement accounts increase wealth accumulation substantially we estimate that approximately 15 of individuals are active savers who respond to tax subsidies primarily by shifting assets across accounts 85 of individuals are passive savers who are unresponsive to subsidies but are instead heavily influenced by automatic contributions made on their behalf active savers tend to be wealthier and more financially sophisticated we conclude that automatic contributions are more effective at increasing savings rates than subsidies for three reasons i subsidies induce relatively few individuals to respond ii they generate substantial crowd out conditional on response and iii they do not increase the savings of passive individuals who are least prepared for retirement jel codes h2 h3

taxation and household portfolio composition us evidence from the 1980s and 1990s abstract this paper explores the relationship between household marginal income tax rates the set of financial assets that households own and the portfolio shares accounted for by each of these assets it analyzes data from the 1983 1989 1992 1995 and 1998 surveys of consumer finances and develops a new algorithm for imputing federal marginal tax rates to households in these surveys the empirical findings suggest that marginal tax rates have important effects on asset allocation decisions the probability that a household owns tax advantaged assets such as tax exempt bonds or assets held in tax deferred accounts is positively related to its tax rate on ordinary income in addition the portfolio share invested in corporate stock which is taxed less heavily than interest bearing assets is increasing in the household s ordinary income tax rate holdings of heavily taxed assets such as interest bearing accounts decline as a share of wealth as a household s marginal tax rate increases

value of recreational fishing in the brazilian pantanal a travel cost analysis using count data models abstract recreational fishing value of the brazilian pantanal is measured using travel cost method tcm we compare non linear poisson and negative binomial count data models to estimate recreational fishing trip demands the count data and truncated models are used primarily to account for non negative integer and truncation properties of recreational fishing trips as suggested by the recreation valuation literature the results reveal that non linear and truncated count data models perform relatively well in our study the economic values of recreational fishing in terms of consumer surplus cs are derived using non linear and truncated models we estimate the cs values from 540 54 to 869 57 per trip resulting in the total social welfare estimate range from 35 to 56 million the study demonstrates a relatively high value of recreational fishing in the pantanal in comparison to similar studies conducted in other parts of the world the findings of this study would be important for resource management decisions in the pantanal and could serve as a reference in valuing similar resources in other ecosystems around the world