Capital income taxation: Reframing the debate

Rainy day by

Subscribe to
The Ledger
Get AEI's weekly snapshot of economic news, views, and cues.

First Name:
Last Name:
Email:
Zip Code:

Although capital income taxes penalize saving and slow long-run growth, the federal tax system imposes multiple such taxes. Seven increases in capital income taxes took effect at the beginning of 2013, and President Obama’s 2014 budget plan proposes further increases. In upcoming decades, rising revenue needs fueled by entitlement growth will create pressure to further expand capital income taxation despite its negative economic effects. Opponents of capital income taxation must reframe the policy debate by explaining the economic disadvantages of capital income taxes and proposing alternative budgetary measures that maintain tax fairness.

The appropriate tax treatment of capital income, or the income earned on savings, has been a major source of political controversy in recent years. Unfortunately, the political debate has often ignored or downplayed the economic effects of this type of taxation. To properly evaluate capital income taxes, we must understand how they affect saving and economic growth.

Read the full report.

Also Visit
AEIdeas Blog The American Magazine
About the Author

 

Alan D.
Viard

What's new on AEI

The Federal Reserve's policy dilemma
image Unemployment benefits barely soften the blow of joblessness
image Stop the US-China bilateral investment treaty talks
image US still has time to stake out a position of strength on Ukraine
AEI on Facebook
Events Calendar
  • 18
    MON
  • 19
    TUE
  • 20
    WED
  • 21
    THU
  • 22
    FRI
No events scheduled this day.
No events scheduled this day.
No events scheduled this day.
No events scheduled this day.
No events scheduled today.
No events scheduled this day.
No events scheduled this day.
No events scheduled this day.