Abstract
In a one-period model the implications of the German tax code, concerning capital taxation, onto the capital market equilibrium are examined. Therefore, we model a corporation sector subject to the corporation tax and private investors liable to private income taxation. We show that there neither exist any possibilities for local tax arbitrage nor tax clienteles. Extending the model for stocks and derivative financial instruments, the tax base for private capital income taxation vanishes and the tax revenue drops to zero.
Similar content being viewed by others
Author information
Authors and Affiliations
Corresponding author
Additional information
revised version received September 3, 2003
Rights and permissions
About this article
Cite this article
Schindler, D. Taxing Nothing – Tax Arbitrage and the Vanishing Revenue from Capital Income Taxation. JEcon 82, 25–47 (2004). https://doi.org/10.1007/s00712-003-0044-8
Received:
Published:
Issue Date:
DOI: https://doi.org/10.1007/s00712-003-0044-8