Permanent and Transitory Responses to Capital Gains Taxes: Evidence from a Lifetime Exemption in Canada / Adam M. Lavecchia, Alisa Tazhitdinova.

Format:

Book

Author/Creator:

Lavecchia, Adam M.

Contributor:

National Bureau of Economic Research.

Tazhitdinova, Alisa.

Series:

Working Paper Series (National Bureau of Economic Research) no. w28514.

NBER working paper series no. w28514

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2021.

Summary:

Using panel data on a 20% random sample of Canadian taxpayers, we study behavioral responses to the cancellation of a lifetime capital gains exemption that resulted in increased capital gains taxation for some individuals. The unique setting allows us to distinguish between short-term avoidance responses and permanent responses to capital gains taxes. We show that the exemption did not change the number of taxpayers reporting positive capital gains, and thus unlikely resulted in increased participation in capital markets. However, the exemption cancellation slightly increased capital gains realizations of the existing traders.

Notes:

Print version record

February 2021.