We should abolish the capital gains tax because it effectively doubles taxes capital income.
But the capital gains tax is only one layer of taxation on capital income.
Changes in taxes on capital income also generate bigger responses than changes on labour income.
If a tax on capital income discourages investment, that impact compounds indefinitely into the future.
Capital income is also subject to the corporate income tax, the individual income tax, and the death tax.
Permanently cutting capital income taxes is the closest thing to an economic free lunch that policy makers can offer.
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How would shifting to a 20% capital income tax rate affect the deficit?
WSJ: Thomas F. Cooley and Lee E. Ohanian: The Bush Tax Cuts Never Went Far Enough
As a result, zero tax on capital income should be preferred, even by individuals who don't earn any such income.
Taxing capital income at a permanent average rate of 20% instead of the current average of 37% would yield substantial benefits.
WSJ: Thomas F. Cooley and Lee E. Ohanian: The Bush Tax Cuts Never Went Far Enough
To compute the labor share, we need to identify what part of each category is labor income, and what part is capital income.
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And with unemployment stubbornly stuck near 10%, there is no better time than now to relieve domestic workers from the burden of capital income taxation.
WSJ: Thomas F. Cooley and Lee E. Ohanian: The Bush Tax Cuts Never Went Far Enough
While Americans were arguing about Reaganomics in the 1980s, Swedish households were enjoying a negative tax rate on capital income, once generous deductions and adjustments for inflation were taken into account.
The history of capital income taxation offers important lessons.
WSJ: Thomas F. Cooley and Lee E. Ohanian: The Bush Tax Cuts Never Went Far Enough
With unemployment climbing, Mr Sarkozy has launched a scheme of state subsidies to supplement low pay, paid for by an extra 1.1% tax on capital income that dismayed his own party's deputies.
Gingrich proposed as well to abolish the capital gains tax altogether, which is just an additional layer of taxation on capital income, in addition to the individual income tax, the corporate income tax, and the death tax.
Today, all the Republican Presidential contenders would reject such a rate, even though a more equal rate on salary and capital income would seem necessary. as it was in 1986, to pass any bipartisan tax reform.
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The significantly higher tax base that would result under lower capital income taxes means that such a reform would be deficit-neutral, provided that either transfer payments were reduced by less than 2% of GDP or a national consumption tax of less than 3% were adopted.
WSJ: Thomas F. Cooley and Lee E. Ohanian: The Bush Tax Cuts Never Went Far Enough
To do that, we follow an established methodology. (See Gomme and Rupert 2004 for a justification of this methodology.) We classify the compensation of employees as unambiguous labor income (UL), and we classify corporate profits, rental income, net interest income, and depreciation as unambiguous capital income (UK).
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Only 13% of income tax returns include capital gains income.
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Raising your personal income tax rate on dividend and capital gain income to 30 percent increases your effective tax rate to 45.3 percent.
Capital investment income is taxed first by the above mentioned, abusive, internationally uncompetitive corporate income tax.
BlackRock Enhanced Capital and Income Fund, Inc. shares are currently trading -0.56% on the day.
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Most capital-income taxes are paid by working-age adults saving for retirement, who will continue to save despite taxes.
Top capital-income tax rates in America and Britain fell by more than half from the 1950s to the 1980s.
One such company is BlackRock Enhanced Capital and Income Fund, Inc. ( NYSE: CII), which saw buying by Director Michael J.
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Again, it is the efficiency argument which is the basis for the differential, even zero, taxation of capital gains and other income from capital.
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In the authors' estimation, a 36% capital-income tax rate is justified.
The florid abusive rhetoric distracts from the multiple taxation of capital investment income, which is actually taxed at least four separate times under our tax code.
The effect was both to raise the tax rates for sellers of small businesses and to introduce a vast discrepancy between the tax rates on capital and income.
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