Inflation and the Excess Taxation of Capital Gains on Corporate Stock / Martin Feldstein, Joel Slemrod.

Format:

Book

Author/Creator:

Feldstein, Martin.

Contributor:

National Bureau of Economic Research.

Slemrod, Joel.

Series:

Working Paper Series (National Bureau of Economic Research) no. w0234.

NBER working paper series no. w0234

Language:

English

Subjects (All):

Economics.

Inflation (Finance).

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1978.

Cambridge, Massachusetts : National Bureau of Economic Research, 1978.

Summary:

The present study shows that in 1973 individuals paid nearly $500 million of extra tax on corporate stock capital gains because of the distorting effect of inflation. A detailed analysis shows that the distortion was greatest for middle income sellers of corporate stock. In 1973, individuals paid capital gains tax on more than $4.5 billion of nominal capital gains on corporate stock. If the costs of these shares are adjusted for the increases in the consumer price level since they were purchased, the $4.5 billion nominal gain becomes a real capital loss of nearly $1 billion. As a result of this incorrect measurement of capital gains, individuals with similar real capital gains were subject to very different total tax liabilities. These findings are based on a new body of official tax return data on individual sales of corporate stock.

Notes:

Print version record

February 1978.