Excess taxation of capital gains is a by-product of inflation in a tax system that uses nominal values as its basis. Studies by Feldstein, Green and Sheshinsky [JPE 1978] and Feldstein and Slemrod [NBER WP 234, 1978] analyze related macroeconomic distortions associated with corporate stock...

In setting the allowable rate of return of public utilities, U.S. regulatory agencies and the courts continue to rely on the standard discounted-cash-flow (DCF) method based on the Gordon-Miller-Modigliani model of share valuation under constant growth - a model which ignores personal taxes....

The interaction of inflation with a progressive tax system has been known to cause tax rates, and thus tax liabilities, to escalate with nominal income. Often blamed for having undesirable effects on investment and wealth, this feature of modern tax systems has not received formal treatment in...

Using a corporate valuation model with personal taxation, this study explores an arbitrage opportunity allowing any public corporation classified under the U.S. law as closed-end investment company to systematically earn an abnormal return by giving up the privilege of pass-through income...

This theoretical paper seeks to correct a common error about the effect of personal taxation on the expected pre-tax return earned on equity portfolios held by mutual funds in tax-sheltered retirement plans such as IRA and Keogh (401-k). Contrary to the prevailing view, the analysis reveals that...

The Economic Recovery Tax Act of 1981 (ERTA) was designed to stimulate capital investment through liberalization of depreciation allowances and investment tax credit for property acquired and placed in service after December 31, 1980. To offer equal incentives to companies that could not benefit...

The personal tax impact on share prices of a permanent distribution via stock repurchase was first modeled by Bierman and West (JF 1966, #4) who argued that the tax impact is minimized under permanent ownership by the same shareholders. Elton and Gruber (JF 1968, #1) faulted the original model...

The modest title chosen by the editor understates the contribution of this paper. To the best of our knowledge, we were the first to use company-based shareholder valuation approach to refute the prevailing view that retention of corporate earnings under the U.S. tax system automatically...

By limiting their attention to the effect of capital gains tax on the price asked by mid-cycle sellers, Elton and Gruber (Review of Economics and Statistics v.52, 1970) overlook a parallel effect of capital loss credit on the bid price offered by mid-cycle buyers. We show that unequal marginal...

This paper and its sequel (Financial Leverage Strategy with Transaction Costs, Applied Mathematical Finance 3, 1996, 191-208) pick up the pecking order leverage theory where it was left in 1984 by Stewart Myers (JF v.39) and his joint paper with Nicolas Majluf (JFE v.13). Static tradeoff...