The Asset Price Incidence of Capital Gains Taxes: Evidence From the Taxpayer Relief Act of 1997 and Publicly-Traded Real Estate Firms

Loading...
Thumbnail Image
Penn collection
Real Estate Papers
Degree type
Discipline
Subject
tax incidence
tax capitalization
REITS
Public Economics
Real Estate
Taxation
Funder
Grant number
License
Copyright date
Distributor
Related resources
Author
Sinai, Todd
Gyourko, Joseph
Contributor
Abstract

We provide new evidence on the asset price incidence of corporate-level investment subsidies by examining the relative stock price performance of publicly traded companies in the real estate industry that should have been differentially affected by the capital gains tax rate reduction enacted in the Taxpayer Relief Act of 1997. By comparing real estate firms that have an organizational structure that allows entities who sell property to it to defer capital gains taxes and that plan to use the structure to acquire property with those that do not, we isolate the effect of the tax cut from industry trends and firm-level heterogeneity. When we examine the time period surrounding the reduction in the capital gains tax rate, our results suggest the tax change was substantially capitalized into lower share prices for these firms and the benefit of the seller’s capital gains tax deferral accrued mainly to the buyer of an appreciated property.

Advisor
Date Range for Data Collection (Start Date)
Date Range for Data Collection (End Date)
Digital Object Identifier
Series name and number
Publication date
2004-07-01
Journal title
Journal of Public Economics
Volume number
Issue number
Publisher
Publisher DOI
Journal Issue
Comments
Recommended citation
Collection