Leonid A. Levin

Title: Leonid A. Levin

Main Research Question: How can the equity tax and shelter mechanism help solve the problems associated with corporate, dividend, and capital gains taxes?

Methodology: The study proposes a simple market mechanism called the Equity Tax. It works for publicly held corporations and aims to solve the issues related to corporate, dividend, and capital gains taxes. The mechanism involves converting the taxes into an annual percentage of stock per year, which is auctioned promptly. The system has no loopholes, requires little regulation, and leaves all business decisions tax-neutral.

Results: The Equity Tax enlarges the pre-tax profit since this is what the taxpayers maximize, not a different after-tax net. The wealth shelter is paid for by efficiency, not by lost tax. The total capital absorbed by the equity-taxed sector is the only thing the tax could possibly distort. The rates should be matched to minimize this distortion.

Implications: The Equity Tax mechanism offers a solution to the problems associated with corporate, dividend, and capital gains taxes. It avoids the major costs of taxes, such as deadweight from distorted incentives and compliance costs. Furthermore, it reduces the revenue-neutral tax rate and requires less regulation, making it a promising approach for tax reform.

Link to Article: https://arxiv.org/abs/0012013v16 Authors: arXiv ID: 0012013v16