New evidence on taxes and portfolio choice

Arbeitspapier

Identifying the effect of differential taxation on portfolio allocation requires exogenous variation in marginal tax rates. Marginal tax rates vary with income, but income surely affects portfolio choice directly. In systems of individual taxation - like Canada's - couples with the same household income can face different effective tax rates on capital income when labor income is distributed differently within households. Using this source of variation we find statistically significant but economically modest responses to taxation. In a placebo test, using data from the U.S. (which has joint taxation), we find no effect of the intra-household distribution of labor income on portfolios.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: QSEP Research Report ; No. 431

Classification and Topics

• Classification: Wirtschaft ; Portfolio Choice; Investment Decisions ; Personal Income and Other Nonbusiness Taxes and Subsidies; includes inheritance and gift taxes ; Fiscal Policies and Behavior of Economic Agents: Household
• Subject: household portfolio choice ; taxes ; Portfolio-Management ; Privater Haushalt ; Einkommensteuer ; Kapitalertragsteuer ; Kanada ; USA

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Alan, Sule ; Atalay, Kadir ; Crossley, Thomas F. ; Jeon, Sung-Hee
• Event: Veröffentlichung
• (who): McMaster University, Research Institute for Quantitative Studies in Economics and Population (QSEP)
• (where): Hamilton (Ontario)
• (when): 2009

Further information

• Handle: http://hdl.handle.net/10419/66897
• Last update: 10.03.2025, 11:46 AM CET