The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Capital Gains Taxation

  • William Gentry
Reference work entry


Capital gains taxation is the taxation of gains or losses from owning assets, usually as part of an income tax. Typically, tax systems measure capital gains or losses upon realization so that capital gains are taxed only when assets are sold. These realization-based tax rules create a number of behavioural incentives. Investors have an incentive to maximize the value of tax deferral by delaying the sale of assets. Capital gains taxes can also affect incentives for investing in risky assets. The realization-based tax rules also complicate the estimation of the revenue consequences of changing the tax rate on capital gains.


Capital gains and losses Capital gains taxation Inflation Tax base Tax incentives for saving Tax planning Taxation of corporate profits 

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Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • William Gentry
    • 1
  1. 1.