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Friday, Might 12, 2023
Subsequent Week’s Tax Workshop
Thursday, Might 18: Daniel Hemel (NYU; Google Scholar) will current The Realization Doctrine and the Optimum Taxation of Capital Revenue (with Dhammika Dharmapala (Chicago; Google Scholar)) as a part of the OMG Transatlantic Tax Talks:
The belief requirement—a standard characteristic of real-world capital earnings tax methods—defers the taxation of good points till the sale or different disposition of belongings. As carried out, it typically imposes efficient capital earnings tax charges that decline over a taxpayer’s holding interval. Students of tax legislation and public finance have lengthy appreciated that the conclusion requirement generates a deferral profit and an related allocative inefficiency (the “lock-in impact”). Nevertheless, they’ve largely ignored the connection between realization and the optimum taxation of capital over the lifecycle. On this paper, we join the conclusion requirement to canonical ends in the optimum tax literature—particularly, the Atkinson-Stiglitz argument for the nontaxation of retirement financial savings and the Diamond-Mirrlees argument for top tax charges on financial savings withdrawn in midlife.
First, we reconcile these ends in a easy three-period framework with stochastic ability shocks within the center interval, demonstrating that the optimum tax charge on financial savings withdrawn within the center interval is excessive whereas the optimum tax charge on financial savings withdrawn within the closing interval is zero. We subsequent present how the conclusion requirement partially implements the optimum age-dependent capital earnings tax schedule. Then, we take into account different implementations of the optimum age-dependent capital tax regime, comparable to tax-preferred retirement financial savings accounts, in addition to the connection between the conclusion requirement and the optimum age-dependent labor earnings tax schedule. Our evaluation doesn’t present a standalone justification for the conclusion requirement, however it highlights probably salutary results of the conclusion rule that policymakers might search to protect or improve as a part of any complete capital tax reform.
No registration is required to attend this occasion.
For particular person tax workshop posts, see right here.
https://taxprof.typepad.com/taxprof_blog/2023/05/next-weeks-tax-workshops.html
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