Tax Effects on the Allocation of Capital Among Sectors and Among Individuals: A Portfolio Approach / Joel Slemrod.

Format:

Book

Author/Creator:

Slemrod, Joel.

Contributor:

National Bureau of Economic Research.

Series:

Working Paper Series (National Bureau of Economic Research) no. w0951.

NBER working paper series no. w0951

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Tax Effects on the Allocation of Capital Among Sectors and Among Individuals

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1982.

Summary:

This paper deals with the allocational effects and implications for efficiency of a tax system in which the rate of tax on capital income differs depending on the recipient of the income and on the type of capital producing the income. It suggests that, in their attempts to measure the distortionary effect of the U.S. capital income tax system, economists may have been looking in the wrong places. In the presence of uncertainty, the intersectoral distortion may be much less than had previously been imagined. However, the tax system distorts at two other margins which have not received much attention. It distorts the inter-household allocation of the housing stock, since the after-tax rate of interest is one component of the opportunity cost of owner-occupied housing. It also distorts the inter-household allocation of risk-bearing. Calculations using a simple commutable general equilibrium model suggest that the excess burden from these latter two distortions are significant components of the total distortionary impact of the tax system.

Notes:

Print version record

August 1982.