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Tax Regimes and Capital Gains Realizations
Uppsala University, Disciplinary Domain of Humanities and Social Sciences, Faculty of Social Sciences, Department of Economics, Uppsala Center for Fiscal Studies.
2011 (English)Report (Other academic)
Abstract [en]

This paper analyzes the effects of progressive versus proportional taxation on capital gains realization behavior. Using a comprehensive panel of over 230,000 individuals in Sweden for 1973-1996, this paper shows after progressive capital gains taxes were cut from over 80% in the 1980s to a proportional tax rate of 30% in 1991, especially high-income taxpayers increased capital gains realizations. The reaction to the introduction of the proportional capital gains tax rate is more pronounced among younger individuals. This paper also shows that under a progressive (proportional) tax regime, investors with excess income are less (more) likely to realize capital gains than individuals with liquidity constraints. Hence, proportional versus progressive taxation plays an important role in capital gains realizations of private investors.

Place, publisher, year, edition, pages
Uppsala: Department of Economics, Uppsala University , 2011. , 42 p.
Working paper / Uppsala Center for Fiscal Studies, Uppsala University, 2011:9
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URN: urn:nbn:se:uu:diva-156773OAI: diva2:433264
Available from: 2011-08-09 Created: 2011-08-09 Last updated: 2011-08-09Bibliographically approved

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