Knowledge Tree
Relations (1)
cross_type 2.81 — strongly supporting 6 facts
The United States federal government regulates and taxes capital gains through specific policies, such as setting tax rates [1] and providing tax subsidies {fact:2, fact:4}. These fiscal decisions impact federal revenue {fact:3, fact:6} and influence broader economic outcomes like wealth inequality [2].
Facts (6)
Sources
How the Government Subsidizes Wealth Inequality americanprogress.org 5 facts
measurementThe two primary tax subsidies for capital gains and dividends are estimated to cost the U.S. federal government approximately $2 trillion over the next 10 years, with the benefits accruing primarily to the wealthiest Americans.
claimBy taxing capital gains and dividends at a lower rate than other income, the federal government increases the likelihood that the rate of return on capital will exceed the economic growth rate, which is a key driver of Thomas Piketty’s theory of rising future economic inequality.
claimThe U.S. federal government provides two specific tax subsidies that contribute to wealth inequality: reduced tax rates on capital gains and dividends, and the exemption of capital gains from income tax upon the death of an investor.
measurementThe nonpartisan Congressional Budget Office estimates that the tax expenditure for low rates on capital gains and dividends will cost the federal government $1.34 trillion in revenue over the next 10 years.
claimIf the federal government eliminated step-up in basis and reduced tax rates on capital gains and dividends, federal revenues would be sufficient to cover all federal programs over the 2014-2023 period, resulting in a primary budget surplus.
5.16: The Role of Tax Policy - Social Sci LibreTexts socialsci.libretexts.org 1 fact
measurementIn 2003, the United States federal government lowered the tax rate for dividends and capital gains from 28 percent to 15 percent.