Conference Agenda

This paper addresses issues in the design of current capital gains tax systems and how to tackle them. Important among such issues is an incentive to delay realisation. We explore alternative policies to mitigate issues in capital gains taxation, such as taxation on accrual, interest rate adjustments on delayed tax payments, indexing of capital gains and a rate of return allowance, and applying tax rules based on accrual and tax payments on realization. Whereas capital gains are measurable on realisation, measuring capital gains before realisation poses a challenge. We address this by exploiting Norwegian tax register data and machine learning methods. From this, we show revenue and incidence effects of the proposed alternatives.

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This paper uses population-wide Norwegian administrative data on property transactions, income, wealth, registered residence, and meter-level electricity consumption to study avoidance of the owner-occupation capital gains exemption. We document a sharp spike in sales exactly at the one-year eligibility threshold, driven entirely by gain realizations and strongest for high-gain transactions. Higher taxable gains significantly increase relocation rates, but electricity data show that most of this response reflects “on paper” moves. These findings imply substantially reduced effective taxation of housing gains and potentially distorted portfolio allocation.

Tax basis is often treated as a simple accounting measure, yet in practice it creates powerful avoidance incentives and meaningful economic distortions. We survey basis-driven behavior from unilateral decisions to complex, multi-party transactions. In single-actor settings—such as cryptocurrencies, step-up in basis, and like-kind exchanges—housing markets bunch at the $500,000 capital gains exemption, implying an elasticity of taxable gains of 0.23. Homeowners also adjust basis through strategic improvements, especially where disclosure is limited. Two-party distortions include conservation easements, avoidance-motivated charitable giving, installment sales, and ETF in-kind contributions, which facilitate deferral and effective basis resetting; these contributions have grown from $5 million to $3 billion in 2025. In multi-party contexts, basis rules affect partnerships, acquisitions, and stock splits. Following a 2008 reform requiring broker basis reporting, annual stock splits fell by roughly 99 percent. Overall, basis complexity generates deadweight loss through misallocation, transaction costs, and rent-seeking.