Measuring permanent responses to capital-gains tax changes in panel data

We use panel data and information about differences in state tax rates to separate the effects of transitory and permanent tax rate changes on capital-gains realizations behavior. The estimated effect of permanent change is substantially smaller than the effect of transitory change. The difference i...

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Bibliographic Details
Published in:The American economic review 1994-09, Vol.84 (4), p.794-809
Main Authors: Burman, L.E, Randolph, W.C
Format: Article
Language:English
Subjects:
ANALISIS DE DATOS
ANALISIS DE SERIES CRONOLOGICAS
ANALYSE DE DONNEES
ANALYSE DE SERIES CHRONOLOGIQUES
Capital gains
Capital gains tax
CAPITAL TAXATION
Coefficients
Consistent estimators
DATA ANALYSIS
ECONOMETRIA
ECONOMETRICS
ECONOMETRIE
Economic models
Economic statistics
ELASTICITIES
ESTADOS UNIDOS DE AMERICA
Estimated taxes
ETATS UNIS
FISCAL POLICIES
IMPOT SUR LE CAPITAL
IMPOT SUR LE REVENU
IMPUESTO AL CAPITAL
IMPUESTO SOBRE LA RENTA
INCOME TAX
Income taxes
Marginal tax rate
MATHEMATICAL MODELS
Measurement
MODELE MATHEMATIQUE
MODELOS MATEMATICOS
POLITICA FISCAL
POLITIQUE FISCALE
Regression analysis
State government
State income tax
State taxes
Studies
Tax rates
tax reform act of 1986
Taxation
Taxation economics
Taxpaying
TIME SERIES ANALYSIS
Timing
Transitory income
USA
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Description
Summary:We use panel data and information about differences in state tax rates to separate the effects of transitory and permanent tax rate changes on capital-gains realizations behavior. The estimated effect of permanent change is substantially smaller than the effect of transitory change. The difference is even larger than differences between estimates from past micro data studies, which have primarily measured the transitory effect, and time-series studies, which have primarily measured the permanent effect. Our results resolve a long-standing conflict between micro data and time-series studies of how marginal tax rates affect capital-gains realizations behavior.
ISSN:0002-8282
1944-7981