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Cover von: Capital Gains Taxes and the Realization of Capital Gains and Losses — Evidence from German Income Tax Data
Martin Jacob

Capital Gains Taxes and the Realization of Capital Gains and Losses — Evidence from German Income Tax Data

Rubrik: Articles
Jahrgang 69 (2013) / Heft 1, S. 30-56 (27)
Publiziert 09.07.2018
DOI 10.1628/001522113X663460
Veröffentlicht auf Englisch.
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Beschreibung
This paper analyzes the influence of capital gains taxation on the decision to realize capital gains and losses when gains are tax-exempt after a certain holding period. Theory predicts that high marginal tax rates incentivize investors to realize taxable losses. In contrast, the propensity to realize taxable short-term capital gains decreases in the marginal tax rate. Using two stratified 10% random samples of all German income tax declarations filed in 2001 and 2004, the paper provides robust evidence for this prediction. The marginal tax rate has a significant and positive (negative) effect on the investor's propensity to realize capital losses (gains).