Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/279436 
Year of Publication: 
2023
Series/Report no.: 
arqus Discussion Paper No. 279
Publisher: 
Arbeitskreis Quantitative Steuerlehre (arqus), Berlin
Abstract: 
This note incorporates wealth taxes in a simple asset valuation model based on discounted cash flows. Any valuation method requires an adjustment of pre-tax into post-tax costs of capital. By adopting the adjustment procedure proposed in previous literature, we show that arbitrage opportunities can occur - which is incompatible with a consistent valuation. In particular, such problems arise if a wealth tax system applies that uses current (instead of previous) stock prices as the basis for assessment. Furthermore, in this setting we derive a consistent relation between pre-tax and post-tax costs of capital that is compatible with the premise of no-arbitrage by exploiting risk-neutral probabilities.
Document Type: 
Working Paper

Files in This Item:
File
Size
297.82 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.