Realization and Revenue Effects of Lifetime Capital Gains Exemptions

This paper derives estimates of the revenue costs of lifetime capital gains exemptions. Since the exemptions provided a significant stimulus to realizations of capital gains for both shares and real estate, previously published 'tax expenditure' estimates overstate the revenue cost of these exemptions The authors provide alternative estimates of the net present value of the revenue costs of the exemptions which take into account their stimulative impact on realizations.