Investor asset valuation under a wealth tax and a capital income tax
Petter Bjerksund () and
Guttorm Schjelderup ()
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Petter Bjerksund: Norwegian School of Economics and Norwegian Centre for Taxation
Guttorm Schjelderup: Norwegian School of Economics, and Norwegian Centre for Taxation and CESifo
International Tax and Public Finance, 2022, vol. 29, issue 4, No 3, 873-889
Abstract We study how a capital income tax and a wealth tax affect an investor's valuation of a company's stock in an efficient international capital market. Using a one-period model, a model of infinite horizon where the asset generates a future cash flow that is a martingale, and a finite horizon model where we abandon the martingale assumption, we find that a wealth tax and/or a capital income tax do not lead investors to value an investment differently from untaxed investors. Investors who seek a higher pre-tax rate of return due to capital taxes harm their own wealth.
Keywords: Wealth tax; Capital income tax; Rate of return; Investment decisions; Domestic and foreign assets (search for similar items in EconPapers)
JEL-codes: G11 G15 H24 H30 (search for similar items in EconPapers)
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