Tax Evasion and Capital Gains Taxation

James Poterba

No 2119, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper uses time-series data to investigate how changes in capital gains tax rates affect taxpayer compliance. It finds that a one percent increase in the marginal tax rate reduces voluntary compliance by between one half and one percent. These results confirm the findings of previous studies based on individual household data. They also suggest that at least one quarter of the observed capital gain realization response to changes in marginal tax rates is due to changes in reporting behavior, rather than portfolio behavior.

Date: 1987-01
Note: PE
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Published as Poterba, James M. "Tax Evasion and Capital Gains Taxation," American Economic Review, Vol. 77, No. 2, (May 1987), pp. 234-239.

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Journal Article: Tax Evasion and Capital Gains Taxation (1987)
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