Open Access. Powered by Scholars. Published by Universities.®
Social and Behavioral Sciences Commons™
Open Access. Powered by Scholars. Published by Universities.®
Articles 1 - 1 of 1
Full-Text Articles in Social and Behavioral Sciences
Taxes And Share Valuation In Competitive Markets, Vernon L. Smith
Taxes And Share Valuation In Competitive Markets, Vernon L. Smith
Economics Faculty Articles and Research
This paper extends the fundamental theorem of share (or capital) valuation under conditions of certainty and purely competitive markets, to allow for the distinction between capital gains and income in the taxation of personal income. The objective is to develop the theorem for the tax case in a form general enough to allow for corporations both currently and not currently paying a dividend. However, the general derivation is sufficiently tedious to warrant a presentation which begins with less general cases. Accordingly, we will first develop the share valuation equation for a continuous discount version of the taxless case for corporations …