Johnson.

• Position: Effect of tax rates on on ordinary income, capital gains, and dividends etc - Brief Article

Johnson uses a general equilibrium model with a detailed household sector that allows for portfolio choice to examine the economic effects of the recent reductions in individual tax rates on ordinary income, capital gains, and dividends, and the implications of the resulting portfolio shift for revenue estimating. His model focuses on tax distortions in household portfolio decisions and the ensuing effects on the allocation of physical capital across production sectors. Taxes distort both real and financial decisions and real and financial variables are determined simultaneously. Businesses and the government sector issue securities to meet their demand for capital. Meanwhile, households and pension funds acquire securities in a manner consistent with their risk-return preferences. The resulting portfolio choices affect market...