Can government collect resources without
hurting investors? Taxation of returns from assets Raaj Sah and Kenji Wada In: Economics for an imperfect world, edited by Richard Arnott, Bruce C. N. Greenwald, Ravi Kanbur and Barry Nalebuff. Chapter 23, pages 419-437. MIT Press, Cambridge, MA, 2003. (Post-publication note. This chapter does not include an abstract. The abstract here is that of a previous working version, cited below.) Click here to download the PDF of the paper ABSTRACT This paper presents the possibility that the government may be able to collect resources, without hurting investors, by introducing or changing taxes and subsidies on gains from different classes of financial assets. Our positive analysis is based on heterogeneous investors and an arbitrary number of asset classes. An example of the results, in the simple setting of one risky and one riskless asset, is that, under plausible conditions, the government’s resources increase, without hurting investors, from a small tax on the return from the risky asset and a small subsidy on the riskless return. We describe several more general qualitative conclusions, and the economic forces underlying them. Previous working versions include: Sah, Raaj and Kenji Wada. “Can government collect resources without hurting investors? Taxation of returns from assets.” University of Chicago, Harris School of Public Policy. Working paper series 01.27. November 2001. |