22.4 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

672

Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 673

Questions and Problems . . . . . . . . . . . . . . . . . . . . . . . . . . 673

Advanced Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 674

CHAPTER 23 Taxes on Risk Taking and Wealth . . . . . . . . . . 675

23.1 Taxation and Risk Taking . . . . . . . . . . . . . . . . . . . . . 677
Basic Financial Investment Model 677
Real-World Complications 678
Evidence on Taxation and Risk Taking 680
Labor Investment Applications 680

23.2 Capital Gains Taxation . . . . . . . . . . . . . . . . . . . . . . . 681

Current Tax Treatment of Capital Gains 681
What Are the Arguments for Tax Preferences for Capital Gains? 683
What Are the Arguments Against Tax Preferences for Capital Gains? 688

23.3 Transfer Taxation . . . . . . . . . . . . . . . . . . . . . . . . . . 688

Why Tax Wealth? Arguments for the Estate Tax 690
Arguments Against the Estate Tax 691

23.4 Property Taxation . . . . . . . . . . . . . . . . . . . . . . . . . 694

Who Bears the Property Tax? 695
Types of Property Taxation 696
Application: Property Tax Breaks to Businesses 696

23.5 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 698

Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 699

Questions and Problems . . . . . . . . . . . . . . . . . . . . . . . . . . 699

Advanced Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 700

CHAPTER 24 Corporate Taxation . . . . . . . . . . . . . . . . . . . 701

24.1 What Are Corporations and Why Do We Tax Them? . . . . . . 703
Ownership vs. Control 704
Application: Executive Compensation and the Agency Problem 705
Firm Financing 707
Why Do We Have a Corporate Tax? 708

24.2 The Structure of the Corporate Tax . . . . . . . . . . . . . . . 709

Revenues 709
Expenses 709

xxiv