NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Eric Toder

Urban Institute

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NBER Working Papers and Publications

June 1990Revenue and Welfare Implications for a Capital Gains Tax Cut
with Patric H. Hendershott, Yunhi Won: w3386
This paper uses a general equilibrium model to simulate both the effects of a preferential capital-gains tax rate on total income tax revenues and the effects of a revenue-neutral substitution between a capital gains preference and marginal income tax rates on economic efficiency and the distribution of income. In the simulations, a capital gains preference increases efficiency by reducing tax distortions between untaxed assets (household and state and local capital) and taxable business sector assets and between realized and unrealized capital gains (the "lock-in" effect), but reduces efficiency by increasing tax distortions between corporate dividends and retained earnings and between financial assets that produce capital gain income and those that produce ordinary income. Because the mo...

Published: "Effects of Capital Gains Taxes on Revenue and Economic Efficiency." From National Tax Journal, Vol. XLIV, No. 1, pp. 21-40, (March 1991).

1984Transfer Elements in the Taxation of Income from Capital
with Harvey Galper
in Economic Transfers in the United States, Marilyn Moon, editor
 
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