Experimental market tests demand for risky assets across different tax regimes, highlighting unexpected shifts in tax benefits and costs.
The demand for risky assets, under various tax regimes, Is examined using an experimental market. Both aggregate/market and individual portfolio holdings are generally consistent with theoretical predictions. However, the market mechanism results In a shifting of tax benefits (or costs) from buyers to sellers, a result not predicted by previous theory. Tax policy implications are discussed.
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Charles W. Swenson (1989) studied this question.
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