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The Lifetime Capital Gains Exemption: Corporate Financing, Risk-taking and Allocation Efficiency

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  • Vijay M. Jog

Abstract

The impact of LCGE on financing of Canadian corporations and investment and risk-taking behaviour of individual Canadians is examined. The post-LCGE period shows a significantly higher reliance on external equity by large corporations, an increase in the number of taxpayers reporting dividend and foreign income. Also clear is the marked increase in 'unlocking' of capital gains. These trends seem to be specific to Canada; no such trends are found for U.S. corporations or taxpayers. The direction and the magnitude of these trends are consistent with the intent of the LCGE. The question of causality may still be open for debate.

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  • Vijay M. Jog, 1995. "The Lifetime Capital Gains Exemption: Corporate Financing, Risk-taking and Allocation Efficiency," Canadian Public Policy, University of Toronto Press, vol. 21(s1), pages 116-135, November.
    • Handle: RePEc:cpp:issued:v:21:y:1995:i:s1:p:116-135
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    References listed on IDEAS

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    1. George R. Zodrow, 1995. "Economic Issues in the Taxation of Capital Gains," Canadian Public Policy, University of Toronto Press, vol. 21(s1), pages 27-57, November.
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    1. James B. Davies, 1995. "Distributional Effects of the Lifetime Capital Gains Exemption: Single vs. Multi-Year Analysis," Canadian Public Policy, University of Toronto Press, vol. 21(s1), pages 159-173, November.

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