Capital Gains Tax Non-Sense?

Please Stow Your Outrage About a Capital Gains Tax Hike!

There is no evidence for any of the calamities that opponents argue would befall the economy and markets.

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By Scott Sumner

To anyone with knowledge of public finance theory, reading media reports of capital gains taxation is almost painful. Here’s an example from Bloomberg:

A group of economists recently argued in the Chicago Booth Review that the prevailing wisdom among scorekeepers that the revenue-maximizing rate is about 30% may be misplaced — and could allow for an even higher rate. A pair of Princeton University economists published research in December showing that hikes may raise “substantially more tax revenue” than scorekeepers currently believe and that the revenue-maximizing rate may be about 40% — almost exactly where Biden’s proposal falls.

Economists and analysts have also made the case that cuts in capital gains rates have a negligible impact on investment decisions and economic growth. (Though, like much around capital gains, that debate isn’t entirely settled.)


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DICTIONARY: Health Economics and Finance

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