Type
Text
Type
Dissertation
Advisor
Anagnostopoulos, Alexis | Azzimonti, Marina | Carceles-Poveda, Eva | Holod, Dmytro.
Date
2016-12-01
Keywords
Economics
Department
Department of Economics
Language
en_US
Source
This work is sponsored by the Stony Brook University Graduate School in compliance with the requirements for completion of degree.
Identifier
http://hdl.handle.net/11401/77405
Publisher
The Graduate School, Stony Brook University: Stony Brook, NY.
Format
application/pdf
Abstract
The Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) and the Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA), introduced a reduction in capital gains and dividend tax rates, generating interest in understanding the macroeconomic effects of capital gains and dividend taxation. My dissertation focuses on the impact of the capital gains and dividend tax changes in a realization-based capital gains tax system, motivated by the fact that capital gains taxes are paid upon realization in the United States. I find that modelling the capital gains tax system as realization-based is crucial for the following reasons: The realization-based capital gains model generates more accurate quantitative results than the accrual-based capital gains model in the sense that the results of the former model are closer to the data for the periods where my models were able to capture the trend of the variables. In the U.S. data for the years 2010-2013, we observe that the dividend-output ratio increases by 68\% before the reforms expire and then declines by 23.5\% upon impact, whereas our realization-based capital gains model estimates that the dividend-output ratio declines by 63.3\% upon impact after nine quarters of increase by about 56\%, moving very closely with the data. On the other hand, the accrual-based model estimates a decline of 67.6\% in the dividend-output ratio after a sharp increase of 250\% for nine quarters. Although we could not capture the trend of the dividend tax revenue at impact, the performance of the realization-based model was better than the accrual-based model before the tax rates go up. Moreover, the capital gains tax revenue estimate of the realization-based model moves closer to the data than the estimate of the accrual-based model until the expiration of the tax reforms. It is also crucial to incorporate the anticipation effects. As expected, similar to the data, when the tax changes are expected, both of our models predict that agents start adjusting their decisions before the tax changes happen, whereas in the unexpected case agents do not react until after the tax rates actually go up. | 111 pages
Recommended Citation
Gonen, Selin, "Anticipation Effects of Capital Gains and Dividend Tax Changes under a Realization-Based or an Accrual-Based Tax System" (2016). Stony Brook Theses and Dissertations Collection, 2006-2020 (closed to submissions). 3220.
https://commons.library.stonybrook.edu/stony-brook-theses-and-dissertations-collection/3220