Arbeitspapier
Tax loss offset restrictions and biased perception of risky investments
We investigate how tax loss offset restrictions affect an investor's evaluation of risky investments under bounded rationality. We analytically identify behavioral tax effects for different levels of loss offset restrictions, tax rate and prospect theoretical biases (loss aversion, probability weighting and reference dependence) and find tax loss offset restrictions significantly bias investor perception, even more heavily than the tax rate. If loss offset restrictions are rather generous, investors are very loss averse or assign a huge weight to loss probabilities, taxation is likely to increase the preference value of risky investments (behavioral tax paradox). Surprisingly, the identified significant perception biases of tax loss offset restrictions occur under both high and low tax rates and thus are relatively insensitive to tax rate changes. Finally, we identify huge differences in behavioral tax effects across countries indicating that tax loss offset restrictions crucially determine the perceived tax quality of a country for risky investments. Our analysis is relevant for policy makers discussing future tax reforms as well as for investors assessing risky investment opportunities.
- Sprache
-
Englisch
- Erschienen in
-
Series: arqus Discussion Paper ; No. 222
- Klassifikation
-
Wirtschaft
Criteria for Decision-Making under Risk and Uncertainty
Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making‡
Taxation and Subsidies: Efficiency; Optimal Taxation
Business Taxes and Subsidies including sales and value-added (VAT)
- Thema
-
asymmetric taxation
investment decisions
loss offset restrictions
perception bias
risktaking
tax effects
tax losses
prospect theory
behavioral taxation
- Ereignis
-
Geistige Schöpfung
- (wer)
-
Mehrmann, Annika
Sureth-Sloane, Caren
- Ereignis
-
Veröffentlichung
- (wer)
-
Arbeitskreis Quantitative Steuerlehre (arqus)
- (wo)
-
Berlin
- (wann)
-
2017
- Handle
- Letzte Aktualisierung
-
10.03.2025, 11:43 MEZ
Datenpartner
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.
Objekttyp
- Arbeitspapier
Beteiligte
- Mehrmann, Annika
- Sureth-Sloane, Caren
- Arbeitskreis Quantitative Steuerlehre (arqus)
Entstanden
- 2017
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