March 25, 2015

DON'T TAX WHAT YOU DO WANT:

The Compelling Case for Lower Capital Gains Tax Rates (JARED MEYER, 3/25/15, The Fiscal Times)

A new report by the non-partisan Tax Foundation shows that America has higher capital gains tax rates than other industrialized countries. Nevertheless, President Obama is pushing Congress to raise taxes on capital gains still further. America's tax treatment of capital gains already raises the cost of capital and reduces investment, and raising rates would create more disincentives to business investment and growth. 

America's 29 percent average combined capital gains top tax rate is more than 5 percentage points higher than the Organization for Economic Co-operation and Development's weighted average of 23 percent. This makes America's top rate the sixth highest among the 34 OECD countries. Nine OECD countries do not tax capital gains income. [...]

Kyle Pomerleau, the author of the Tax Foundation report, explained why levying high capital gains taxes harms economic growth. He told me, "High taxes on capital income increase the cost of capital, which reduces the incentive to invest. Lower investment means a smaller capital stock, lower productivity, and lower wages for workers. When lawmakers look to reform our tax code they need to understand that capital taxes should be lower, whether that means cutting the corporate tax rate, cutting the capital gains tax rate, or some combination of the two."

Ideally you'd even tax savings, not investment.
Posted by at March 25, 2015 5:35 PM
  

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