Zachary Liscow, Yale University Law School & Edward Fox, University of Michigan Law School 

Zachary Liscow

     Zachary D.Liscow

Edward Fox

        Edward G. Fox

Zachary Liscow, Yale University Law School

Zachary Liscow is an Associate Professor of Law at Yale Law School. His main research interest is understanding the appropriate policy levers to address income inequality and, in particular, the role that tax policy versus other legal rules should play. He also works in a variety of other areas, including urban economics, environmental policy, and empirical legal studies. Liscow earned his Ph.D. in economics from the University of California, Berkeley, and his J.D. from Yale Law School. He graduated summa cum laude from Harvard College with degrees in Economics and in Environmental Science and Public Policy. He has been a Staff Economist at the White House Council of Economic Advisers and worked for the World Bank's inspector general. Liscow clerked for the Honorable Stephen F. Williams on the U.S. Court of Appeals for the D.C. Circuit.



Edward Fox, University of Michigan Law School 

Professor Edward Fox teaches and writes on personal and business taxation. His research interests also include corporate and securities law. His work has been published in the Columbia Law Review, the Texas Law Review, and the Yale Law Journal. His current working papers empirically study the effect of taxation on marriage, the incidence of the U.S. corporate income tax, and how Delaware incorporation may affect the value of firms with controlling shareholders, among other subjects. Prior to joining the Michigan Law faculty, he was a fellow at the Center for Law and Economics at New York University School of Law.


The Psychology of Taxing Capital Income: Evidence from a Survey Experiment on the Realization Rule


How to tax capital income is a critical issue today. The realization rule—requiring that property usually must be sold before gains are taxed—is central to taxing capital income, but often decreases the efficiency, equity, and simplicity of the tax system. Estimates suggest that the realization rule costs the government over $2 trillion over 10 years. Given these problems, it is unclear why the rule exists for assets that are easy to value and sell. Scholars have long speculated about the role of the public’s views here, but little is known empirically about them. We conduct the first survey experiment to understand the psychology of the realization rule, which has broad implications for the taxation of capital income.

We have three main findings. First, respondents strongly prefer to wait to tax gains on stocks until sale: 75% to 25%. This pattern persists across a variety of other assets and policy framings: indeed, nearly half of those without stock prefer raising everyone’s taxes (including their own) to taxing unsold stock gains. But the flip side is that there is surprisingly strong support for taxing gains on assets at sale or transfer, including at death, in areas where current law never taxes those gains. Second, these views change only modestly after randomized participants observe a policy debate composed of videos explaining both the pros and cons of taxing before sale, though the pro and con treatments have large effects individually. And, third, among many possible explanations of these attitudes, we find particular evidence for four: using a different mental account for unsold gains than other ways of getting richer; a tendency to support the status quo; concerns about complexity; and a desire to tax consumption, not income, in the context of capital gains.


Link to paper


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