Advantages of Low Capital Gains Tax Rates

5 Pages Posted: 27 Feb 2013

Date Written: 2012

Abstract

Some policymakers think that a reduced rate for capital gains is an unjustified tax preference. However, capital gains are different than ordinary income and have been subject to special low rates since 1922. Nearly every country has reduced tax rates on individual long-term capital gains, with some countries imposing no tax at all. This bulletin describes why policymakers should keep capital gains taxes low, and it presents data on capital gains tax rates for the 34 nations in the Organization for Economic Cooperation and Development (OECD).

Keywords: capital gains tax rate, federal tax policy, U.S. capital gains cuts, American tax policy, 2013 capital gains increase, OECD, comparative study, benefits

JEL Classification: H20, H21, H25

Suggested Citation

Edwards, Chris, Advantages of Low Capital Gains Tax Rates (2012). Cato Institute Tax & Budget Bulletin, No. 66, December 2012, Available at SSRN: https://ssrn.com/abstract=2224078

Chris Edwards (Contact Author)

Cato Institute ( email )

1000 Massachusetts Avenue, N.W.
Washington, DC 20001-5403
United States

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