The Effect of Tax Rates and Transaction Costs on the Tax Trading Option: Evidence from Stock Splits
Bibliographic record
Abstract
Previous research suggests that investors' timing option on the realization of capital gains and losses is valuable when long-term and short-term capital gains tax rates differ. Prior studies simulate returns to a variety of tax strategies and find that the benefits of the tax trading option are sensitive to investors' assumed trading behavior as well as to tax rates, transaction costs, and stock price variances. However, the historical effects of changes in these conditions have not previously been estimated. In this study, we use the stock return variance changes that typically accompany stock splits to examine the effects of tax rates, transaction costs, and interest rates on the value of the tax trading option. Our results suggest an increase in the value of the tax option when trading costs declined after the 1975 elimination of fixed commissions. We also find evidence of a substantial reduction in the value of the tax option when the gap between short-and long-term capital gains tax rates was reduced in 1982.
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How this classification was reachedexpand
Full frame distilled prediction
Teacher imitationNot calibrated prevalence, not ground truth. Human validation pending. Learned from the 10,348 direct Codex labels and 10,348 direct Gemma labels. Candidate is the union of thresholded teacher heads; consensus is their intersection. These outputs are machine_predicted_unvalidated and are not human labels or direct frontier model labels.
Codex and Gemma teacher scores by category
| Category | Codex | Gemma |
|---|---|---|
| Metaresearch | 0.003 | 0.001 |
| Meta-epidemiology (narrow) | 0.000 | 0.000 |
| Meta-epidemiology (broad) | 0.000 | 0.000 |
| Bibliometrics | 0.000 | 0.000 |
| Science and technology studies | 0.000 | 0.000 |
| Scholarly communication | 0.000 | 0.001 |
| Open science | 0.000 | 0.000 |
| Research integrity | 0.000 | 0.000 |
| Insufficient payload (model declined to judge) | 0.000 | 0.000 |
Machine scores (provisional)
The two teacher heads of the student model, read on this work. A score orders the frame for review; it never asserts a category, and the validation status ships verbatim with every row.
Baseline scores from an immature model (maturity gate not passed, 7 training rounds). Scores rank; they never assert a category.
score_only:v0-immature-baseline · verbatim from the scoring run: score_only means the number may rank works, and no category label ships from itClassification
machine, unvalidatedMachine predicted; a candidate call from one teacher head, not a consensus.
How this classification was reached, model by model and score by score, is at the end of the page under "How this classification was reached".