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| Author: | Alan, S. (et. al) |
| Title: | New evidence on taxes and portfolio choice |
| Journal: | Journal of Public Economics
2010 : DEC, VOL 94:11-12 p. 813-823 |
| Index terms: | household portfolios taxation portfolio selection income tax capital income tax |
| Language: | eng |
| Abstract: | Recognizing the impact of differential taxation on portfolio allocation requires exogenous variation in marginal tax rates, which vary with income, but income certainly affects portfolio choice directly. In systems of individual taxation amongst other Canada's couples with the same household income can face different effective capital income tax rates when labor income is distributed asymmetrically within households. Using this source of variation we find portfolio responses to taxation among more wealthy households. The estimated effects are statistically significant but economically minor. In a placebo test, using data from the U.S. (which has joint taxation), no effect is found of the intra-household distribution of labor income on portfolios. |
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