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The Effects of Taxation on the Selling of Corporate Stock and the Realization of Capital Gains

Martin Feldstein^1,2; Joel Slemrod³; Shlomo Yitzhaki⁴

¹ National Bureau of Economic Research · ² Harvard University · ³ University of Minnesota System · ⁴ Rehovath University and the Falk Institute, Jerusalem, Israel

This study provides the first econometric analysis of the effect of taxation on the realization of capital gains. The analysis thus extends and complements the earlier study by Feldstein and Yitzhaki [1978] of the effect of taxation on the selling of corporate stock. The present analysis, using a large, new body of data obtained from individual tax returns, supports the earlier finding that corporate stock sales are quite sensitive to tax rates and then shows that the effect on the realization of capital gains is even stronger.

DOI

10.2307/1885668

Volume

94 (4)

Pages

777

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