ImplicittaxesandTaxclienteles(英文版)(15页).pdf

Session 4 �An introduction to • Implicit taxes • Tax clienteles • Tax arbitrage 15.518 Fall 2002 Session 4 Implicit Taxes �In equilibrium the after-tax returns on all assets with the same risk and maturity have to be the same. �For equal after-tax returns the pre-tax return on tax favored assets must be lower than that of fully taxed assets • This reduction in pre-tax returns is referred to as an implicit tax • The most common example of implicit taxes is the yield on municipal bonds, interest on which is (generally) excluded from gross income for federal tax purposes. • The yields on municipal bonds are lower than those of fully taxable bonds with similar risk. 15.518 Fall 2002 Session 4 Taxes and Relative Prices: Implicit Taxes �While our focus today will be on assets and rates of return, the implicit tax concept is more general than just the returns on financial assets. For example: • When a compensation package has mostly heavily taxed components, workers require more total pretax compensation than when the firm uses tax-advantaged forms of compensation. • Multinational investment provides another example. Input prices (especially land) in countries that offer multinational corporations special tax incentives for direct investment may be higher than they would be without the tax incentives.