TY  - JOUR
AU  - Gordon,Roger H.
AU  - Varian,Hal R.
TI  - Taxation of Asset Income in the Presence of a World Securites Market
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 1994
PY  - 1986
Y2  - August 1986
UR  - http://www.nber.org/papers/w1994
L1  - http://www.nber.org/papers/w1994.pdf
N1  - Author contact info:
Roger H. Gordon
Department of Economics 0508
University of California, San Diego
9500 Gilman Drive, Dept. 0508
La Jolla, CA 92093
Tel: 858/534-4828
Fax: 858/534-7040
E-Mail: rogordon@ucsd.edu

Hal Varian
576 Del Amigo Rd
Danville, CA 94526
Tel: 925 262 3641
E-Mail: hal@sims.berkeley.edu
AB  - This paper shows, using a standard CAPM model of security prices in a world market,
that even small countries can affect the price of domestically issued risky securities, while
large countries can affect the prices of all securities. As a result, countries have the incentive to set tax rates such that in equilibrium investors specialize in domestic securities, and net capital flows between countries are restricted. Each country does this to increase the utility of domestic residents, taking as given the tax policies of other governments, but the net outcome is a reduction in world efficiency and likely a reduction in the utility of all individuals.
ER  -