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Capital gains are taxed at a different rate than income and this reduces revenues the government ...

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Capital gains are taxed at a different rate than income and this reduces revenues the government ...

Capital gains are taxed at a different rate than income and this reduces revenues the government receives. All else equal, what would happen if capital gains taxes were eliminated?

▸ They would have to be replaced by a consumption tax.

▸ The government would not be able to spend money on any programs.

▸ The deficit would increase because of lack of revenues.

▸ Everyone would have to pay less in taxes.

Textbook

Macroeconomics: Principles, Applications and Tools

Edition: 7^th

Authors: O'Sullivan, Sheffrin, Perez

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