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Investment selection and individual portfolio management
184
FINANCIAL
SERVICES REVIEW, l(2)
1991
TAXATION Retrospective Capital Gains Taxation, by Alan J. Auerbach (University of Pennsylvania) This paper presents a new approach to the taxation of capital gains that eliminates the deferral advantage of realization-based systems, along with the lockin 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 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. The American EconomicReview, Vol. 81, No. 1 (March 1991), pp. 167-178. (Reprinted with permission of the American Economic Association.) Tax Evasion and Portfolio Decisions, by Y. Landskroner, I. Swary
J. Paroush, and
This paper extends the literature on tax evasion under uncertainty by considering not only the uncertain prospect of an audit, but also a risky capital asset. Tax evasion is considered as a risky investment and the decision about it is part of a portfolio decision of the individual. The individual decides about an investment in a riskless financial asset, a risky financial asset, as well as tax evasion. The effect of risk, risk aversion, the income tax rate, and “enforcement” parameters are considered. PublicFinance, Vol. 45, No. 3 (1990), pp. 409-422. (Reprinted with permission of Public Finance.) Regional Bias in Federal Tax Subsidy Rates for Giving? by C.T. Clotfelter and D. Feenberg This study examines regional variation in average subsidy rates for charitable donations. The subsidy rate for an individual depends on the taxpayer’s itemization status and marginal tax rate, and this subsidy rate rises with income. One would expect that average subsidy rates would be higher in wealthier regions. What is not clear is whether subsidy rates vary systematically independent of income. In order to examine these questions, the authors decompose subsidy rates independent of income, in what appears to be an unintended regional bias in the federal policy toward charitable giving. Public Finance, Vol. 45, No. 2 (1990), pp. 228-240. (Reprinted with permission of Public Finance.)
FINANCIAL
SERVICES REVIEW, l(2)
1991
TAXATION Retrospective Capital Gains Taxation, by Alan J. Auerbach (University of Pennsylvania) This paper presents a new approach to the taxation of capital gains that eliminates the deferral advantage of realization-based systems, along with the lockin 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 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. The American EconomicReview, Vol. 81, No. 1 (March 1991), pp. 167-178. (Reprinted with permission of the American Economic Association.) Tax Evasion and Portfolio Decisions, by Y. Landskroner, I. Swary
J. Paroush, and
This paper extends the literature on tax evasion under uncertainty by considering not only the uncertain prospect of an audit, but also a risky capital asset. Tax evasion is considered as a risky investment and the decision about it is part of a portfolio decision of the individual. The individual decides about an investment in a riskless financial asset, a risky financial asset, as well as tax evasion. The effect of risk, risk aversion, the income tax rate, and “enforcement” parameters are considered. PublicFinance, Vol. 45, No. 3 (1990), pp. 409-422. (Reprinted with permission of Public Finance.) Regional Bias in Federal Tax Subsidy Rates for Giving? by C.T. Clotfelter and D. Feenberg This study examines regional variation in average subsidy rates for charitable donations. The subsidy rate for an individual depends on the taxpayer’s itemization status and marginal tax rate, and this subsidy rate rises with income. One would expect that average subsidy rates would be higher in wealthier regions. What is not clear is whether subsidy rates vary systematically independent of income. In order to examine these questions, the authors decompose subsidy rates independent of income, in what appears to be an unintended regional bias in the federal policy toward charitable giving. Public Finance, Vol. 45, No. 2 (1990), pp. 228-240. (Reprinted with permission of Public Finance.)