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Lecture 3 - UCSB Economics
Lecture 3 - UCSB Economics

... Adam Smith: The Wealth of Nations(1776)  argues ...
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... although the pace is likely to remain slow and short-term problems may well occur along the way. As European equities represent one of the larger components of the portfolio, he awaits greater clarity about the path of the eurozone economy. However, he recognises the trading bloc’s vulnerability, gi ...
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... for the return on different types of savings, cf. Figure 6. This is problematic since it has a distorting effect on As noted, Denmark follows an ETT principle in the taxasset allocation. The lower taxation of the return on penation of pensions overall. It is thus one of the few counsion savings is m ...
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Negative gearing

Negative gearing is a practice whereby an investor borrows money to acquire an income-producing investment property, expecting the gross income generated by the investment, at least in the short-term, to be less than the cost of owning and managing the investment, including depreciation and interest charged on the loan (but excluding capital repayments). The arrangement is a form of financial leverage. The investor may enter into this arrangement expecting the tax benefits (if any) and the capital gain on the investment, when the investment is ultimately disposed of, to exceed the accumulated losses of holding the investment.The tax treatment of negative gearing would be a factor which the investor would take into account in entering into the arrangement, which may generate additional benefits to the investor in the form of tax benefits if the loss on a negatively geared investment is tax-deductible against the investor's other taxable income, and if the capital gain on the sale is given a favourable tax treatment. Some countries, including Australia, Japan and New Zealand allow unrestricted use of negative gearing losses to offset income from other sources. Several other OECD countries, including the USA, Germany, Sweden, and France, allow loss offsetting with some restrictions. In Canada losses cannot be offset against wages or salaries. Applying tax deductions from negatively geared investment housing to other income is not permitted in the UK or the Netherlands. With respect to investment decisions and market prices, other taxes such as stamp duties and capital gains tax may be more or less onerous in those countries, increasing or decreasing the attractiveness of residential property as an investment.Another example of negative gearing is borrowing to purchase shares whose dividends fall short of interest costs. A common type of loan to finance such a transaction is called a margin loan. The tax treatment may or may not be the same.
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