STSTEER

Capital Market Distortions

Computing how a tax on the return to capital, compounded over several years, lowers the capital stock and output.

Question template

You run a recording studio. Your sound equipment is worth $initial stock thousand today. Each year the capital earns a pre-tax return of growth rate% of its value, the government taxes that return at capital tax%, and the whole after-tax return is reinvested in more sound equipment. The capital does not depreciate, and nothing else is added to it or taken out of it. Compared with no tax on the return (and everything else the same), how much less will your capital be worth after num years years? Give the difference in thousands of dollars, rounded to two decimals.

Use it

from datasets import load_dataset
ds = load_dataset("narunraman/steer_me", "capital_market_distortions")