We revisit the 'excess subsidy' granted to the CPR for the first transcontinental railway in 1881. Previous studies have evaluated the subsidy from an ex post perspective, and concluded that it was 'too large.' We argue that the subsidy should be evaluated from an ex ante perspective, which...

Using event study methodology, we test the hypothesis that the 1985 capital gains exemption decreased the marginal effective tax rate on capital gains using two samples of stock market prices that control for industry and firm level effects of other aspects of the budget. We derive estimates of...

The investment neutrality conditions of an imputed profits tax, which grants ex ante depreciation allowances, are examined in the presence of income and capital risk and capital adjustment costs. Neutrality may be achieved with a cost of finance deduction on the full market value of the firm,...

The implications of risk and irreversibility for the measurement of marginal effective tax rates on capital are examined. It is shown that, when capital is irreversible, the marginal effective tax rate is an increasing function of systematic and unsystematic capital and income risk. The tax...

The 1986 Canadian federal budget, which increased the tax rate on dividends vis-a-vis capital gains, provides a natural experiment for examining the relationship between taxation and asset values. The authors employ a stock market event study to investigate the differential impact of this tax...