Leonid A. Levin

Title: Leonid A. Levin

Main Research Question: How can the distortive effects of corporate, dividend, and capital gains taxes be eliminated while maintaining tax revenue?

Methodology: The study proposes a new tax system called the Equity Tax. This system is designed to work exclusively for publicly held corporations. The main idea is to use the share prices to reflect the expected true annual return, as perceived by investors, not as defined by law. The system works by having the corporations and their shareholders pay no income, dividend, or capital gain taxes. Instead, they give the IRS 2% of their stock per year, which is auctioned promptly.

Results: The study found that the Equity Tax system has several benefits. It eliminates the loopholes found in other tax systems, reducing the revenue-neutral tax rate. It also requires less regulation and leaves all business decisions tax-neutral. Furthermore, it enlarges the pre-tax profit since this is what the taxpayers maximize, not a different after-tax net.

Implications: The Equity Tax system could potentially revolutionize the way taxes are handled for corporations, dividends, and capital gains. It eliminates the distortive effects of other tax systems, making the tax process more efficient and less costly. However, it's important to note that the system may be too simple to be right, and it requires all capital gains to be realized, which could be costly and rare.

Link to Article: https://arxiv.org/abs/0012013v1 Authors: arXiv ID: 0012013v1