TITLE:
Is it Rational to Minimize Tax Payments?
AUTHORS:
Andreas Loffler, Lutz Kruschwitz
KEYWORDS:
Decision, Taxes, CAPM, Tax-CAPM
JOURNAL NAME:
Modern Economy,
Vol.1 No.1,
June
7,
2010
ABSTRACT: The opinion is occasionally voiced that investors should avoid paying tax at all costs. In this paper it is being investigated, using a simple portfolio model with taxes, whether avoiding tax really leads to more µ-σ-efficient solutions. It is demonstrated for four different concepts of tax-minimising policy that they are a far cry from an efficient solution.