BuyFindarrow_forward

Principles of Microeconomics

7th Edition
N. Gregory Mankiw
ISBN: 9781305156050

Solutions

Chapter
Section
BuyFindarrow_forward

Principles of Microeconomics

7th Edition
N. Gregory Mankiw
ISBN: 9781305156050
Textbook Problem

When someone owns an asset (such as a share of stock) that rises in value, he has an “accrued” capital gain. If he sells the asset, he “realizes” the gains that have previously accrued. Under the U.S. income tax system, realized capital gains are taxed, but accrued gains are not.

a. Explain how individuals’ behavior is affected by this rule.

b. Some economists believe that cuts in capital gains tax rates, especially temporary ones, can raise tax revenue. How might this be so?

c. Do you think it is a good rule to tax realized but not accrued capital gains? Why or why not?

Subpart (a):

To determine
Reason for taxing only realized capital gains.

Explanation

The mentioned law affects the individual’s decision behaviour of whether to keep or sell the asset. When an individual sells the asset, she pays t...

Subpart (b):

To determine
Reason for taxing only realized capital gains.

Subpart (c):

To determine
Reason for taxing only realized capital gains.

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Additional Business Solutions

Find more solutions based on key concepts

Show solutions add

How are the four areas of operations control interrelated?

Foundations of Business (MindTap Course List)

What is business intelligence (BI)?

Accounting Information Systems

It is often useful to perform a sensitivity analysis, where you show how your estimate of intrinsic value varie...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)

Working capital is a measure of (a) liquidity. (b) profitability. (c) leverage.

College Accounting, Chapters 1-27 (New in Accounting from Heintz and Parry)