From comments:
I agree, it is testable. One thing that makes testing tough, though, is trying to figure out how the market discount rate change as a result of tax policy. IN any event my principal criticism of Asness is that if you are going to change the numerator, you also need to change the denominator.
Under this theory, if gross-of-tax discount rates are 10% and an investment promises $10 per year, I'll plunk down $100 for it if tax rates are zero, and $100 if tax rates are 50% and I get only $5 per year. "To be tested." Recall also, if tax rates are on nominal returns, with even moderate inflation, the tax falls on what is a compensation for inflation. The effect of higher taxes seems like an empirical question, with all due respect to both Buffett & Asness, and Richard.
I agree, it is testable. One thing that makes testing tough, though, is trying to figure out how the market discount rate change as a result of tax policy. IN any event my principal criticism of Asness is that if you are going to change the numerator, you also need to change the denominator.
