Knowledge Tree
tax arbitrage
Facts (11)
Sources
Taxes, Government Transfers and Wealth Inequality milkenreview.org Jan 21, 2019 10 facts
claimTax arbitrage is a strategy used by individuals and corporations where they immediately deduct interest and other expenses while choosing to recognize taxable gains only when they sell their assets.
procedureTax arbitrage is a strategy used by individuals and corporations where they immediately deduct interest and other expenses while choosing to recognize taxable gains only when they sell their assets.
claimTax arbitrage is practiced by average individuals when they deduct mortgage interest on their homes while simultaneously contributing to retirement accounts that defer tax liability.
perspectivePublic policy should limit tax arbitrage that allows expenses like interest to be fully deducted while avoiding taxes on capital gains and other tax-deferred income.
claimTax shelters and the low taxation of multinational companies are often linked to the practice of arbitrage.
claimThe current tax system allows for tax arbitrage games that provide a positive return to investors even when it is difficult to identify any overall return to society.
claimTax avoidance strategies often rely on arbitrage, including the use of tax shelters and the low taxation of multinational companies.
perspectiveLimits on tax arbitrage, such as preventing the full deduction of interest expenses while avoiding taxes on capital gains and tax-deferred income, are a policy priority.
claimBorrowing and deducting home mortgage interest while simultaneously contributing to tax-deferred retirement accounts constitutes tax arbitrage.
claimEconomists question why some income from capital is double- or triple-taxed while other capital income is not taxed at all, and why tax arbitrage games provide positive returns to investors without clear societal returns.
How Government Tax And Transfer Policy Promotes Wealth Inequality taxpolicycenter.org Feb 5, 2019 1 fact
claimIndividuals and corporations can immediately deduct interest and other expenses while only recognizing taxable gains when they sell assets, a form of tax arbitrage that facilitates tax shelters and low taxation for multinational companies.