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November 19, 2008
Treasury Releases Capital Gains Tax Data
The Treasury Department's Office of Tax Analysis has released data showing that increases in capital gains tax rates have corresponded with declines in tax receipts, while lower capital gains rates have corresponded with rising tax revenues:
- Capital Gains and Taxes Paid on Capital Gains for Returns with Positive Net Capital Gains, 1954-2006
- Long-Term Capital Gains and Taxes Paid on Long-Term Capital Gains, 1977-2006
November 19, 2008 in IRS News | Permalink
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The assertion that "increases in capital gains tax rates have corresponded with declines in tax receipts" is correct when one uses the maximum tax rates to predict capital gains tax receipts (adjusted to 2007 dollars using the CPI) provided in both data sets. However, using the provided Average Effective Tax Rate as a predictor of tax receipts shows that there is no correlation between the two with respect to long term capital gains, and that revenues actually rise with increasing average short term capital gains rates. It seems that there is much more at issue than the maximum rate.
Mine is admittedly a rudimentary back-of-the-envelope analysis, but it suggests that the truth is not as cut and dried as this blog post would suggest.
Posted by: Chris Bushong | Nov 19, 2008 1:58:36 PM
It appears that I just posted a comment to a black hole -- let's try this again.
A quick and dirty analysis reveals that while the maximum tax rate is correlated with decreased tax receipts in both the long term and short term data sets, average effective long term tax rate has no such correlation with respect to long term capital gains tax revenues, and there seems to be a positive relationship between the average effective short term capital gains rate and tax receipts.
Posted by: Chris Bushong | Nov 19, 2008 2:22:33 PM
Taxes will decrease now with the new president and crisis :)
Posted by: H&M clothing | Nov 20, 2008 6:11:33 AM
