Tax capitalization is defined by which description?

Question

Quizplus · Accepted Answer

Tax capitalization refers to the effect of taxes on asset prices. Specifically, it refers to the change in asset prices due to a change in the tax levied on the returns from the asset. It is the idea that taxes affect the present value of an asset's future cash flows, and therefore impact the price that investors are willing to pay for the asset. A higher tax rate would reduce the after-tax return on an asset, which would lower its value and vice versa.

Tax Capitalization Is Defined by Which Description