Thursday, August 11, 2016
David Kamin (NYU), Taxing Capital: Paths to a Fairer and Broader U.S. Tax System:
Taxing capital is a key way to maintain and increase the progressivity in the U.S. tax system and raise the revenue needed to support government activities and investments that in turn will help ensure strong and sustainable economic growth. Why turn to capital as a source of government revenue? Taxing capital is a highly progressive form of taxation that research suggests does not seriously affect the rate of savings among high-income Americans—an important consideration in terms of encouraging future economic growth—and is a key part of optimal taxation in the United States.
Yet the federal tax rate paid on capital income is, on average, relatively low, due to a combination of factors including low existing rates, special tax breaks, and the gaming of the system to avoid paying taxes on capital.