Feldstein, Martin. <br/><br/>
Inflation and the Excess Taxation of Capital Gains on Corporate Stock / 
Martin Feldstein, Joel Slemrod. 
 - Cambridge, Mass.  National Bureau of Economic Research  1978. 
 - 1 online resource:  illustrations (black and white); 
 - NBER working paper series  no. w0234 .
 - Working Paper Series (National Bureau of Economic Research)  no. w0234. .
<br/><br/> February 1978. 
<br/><br/> The present study shows that in 1973 individuals paid nearly $500 million of extra tax on corporate stock capital gains because of the distorting effect of inflation. A detailed analysis shows that the distortion was greatest for middle income sellers of corporate stock. In 1973, individuals paid capital gains tax on more than $4.5 billion of nominal capital gains on corporate stock. If the costs of these shares are adjusted for the increases in the consumer price level since they were purchased, the $4.5 billion nominal gain becomes a real capital loss of nearly $1 billion. As a result of this incorrect measurement of capital gains, individuals with similar real capital gains were subject to very different total tax liabilities. These findings are based on a new body of official tax return data on individual sales of corporate stock. 
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