Public Choice

, Volume 145, Issue 1–2, pp 25–38 | Cite as

Do high taxes lock-in capital gains? Evidence from a dual income tax system

  • Sven-Olov Daunfeldt
  • Ulrika Praski-Ståhlgren
  • Niklas Rudholm


The purpose of this paper is to study whether investors’ willingness to realize capital gains falls when the marginal tax rate on capital gains is raised. We use a rich register-based panel data set covering almost 8% of the Swedish population. The results indicate that a 10% increase in capital gains tax rate reduces the number of realizations of capital gains with 8.7% and the realized amount, given the decision to realize, with 1.9%. In addition, we find that wealthy individuals seem to respond more to changes in capital gains tax rates than less-wealthy.


Capital gains realizations Tax avoidance Tax policy Panel data 

JEL Classification

H24 H31 


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Copyright information

© Springer Science+Business Media, LLC 2009

Authors and Affiliations

  • Sven-Olov Daunfeldt
    • 1
  • Ulrika Praski-Ståhlgren
    • 2
  • Niklas Rudholm
    • 3
    • 4
  1. 1.The Ratio InstituteStockholmSweden
  2. 2.Department of EconomicsUniversity of GävleGävleSweden
  3. 3.Department of EconomicsDalarna UniversityBorlängeSweden
  4. 4.Swedish Retail InstituteStockholmSweden

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