Are capital gains the Achilles’ heel of taxing the rich?

Joel Slemrod and Xinyu Chen

Oxford Review of Economic Policy, 2023, vol. 39, issue 3, 592-603

Abstract: This paper considers the role of capital gains taxation in enhancing tax progressivity, and argues that capital gains are the Achilles’ heel of taxing the rich more effectively. We revisit the key aspects of how capital gains are taxed and address the main arguments against taxing capital gains more heavily: (i) it would discourage socially beneficial activities, such as innovation, (ii) implementing structural changes is unadministrable, and (iii) the ‘lock-in’ effect means that increasing the tax rate is an inefficient way to raise revenue. To address concerns with the unpopularity of taxing unrealized gains during one’s lifetime and retroactive taxes, we conclude with a partial proposal for constructive realization at death that would apply only to gains accrued after a certain date, while allowing for discounted pre-payments of tax liability.

Keywords: capital gains; taxation (search for similar items in EconPapers)
Date: 2023
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://hdl.handle.net/10.1093/oxrep/grad027 (application/pdf)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oup:oxford:v:39:y:2023:i:3:p:592-603.

Access Statistics for this article

Oxford Review of Economic Policy is currently edited by Christopher Adam

More articles in Oxford Review of Economic Policy from Oxford University Press and Oxford Review of Economic Policy Limited
Bibliographic data for series maintained by Oxford University Press ().