Show that in the presence of short-term traders and transaction costs, the tax rate cannot be inferred
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Show that in the presence of short-term traders and transaction costs, the tax rate cannot be inferred from equation \(\frac{P_{b}-P_{d}}{D}=\frac{1-\tau_{d}}{1-\tau g}\). Notice that profits from short-term trades-that is, profits realized in less than 12 months-are taxed as ordinary income.
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