Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/236362 
Year of Publication: 
2021
Series/Report no.: 
IZA Discussion Papers No. 14331
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
Using panel data on a 20% random sample of Canadian taxpayers, we study behavioral responses to the cancellation of a lifetime capital gains exemption that resulted in increased capital gains taxation for some individuals. The unique setting allows us to distinguish between short-term avoidance responses and permanent responses to capital gains taxes. We show that the exemption did not change the number of taxpayers reporting positive capital gains, and thus unlikely resulted in increased participation in capital markets. However, the exemption cancellation slightly increased capital gains realizations of the existing traders.
Subjects: 
capital gains tax
real responses
avoidance
re-timing
JEL: 
H24
H31
G51
Document Type: 
Working Paper

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