Capital Gains Tax Rates, Stock Markets, and Growth

Research Report

Capital Gains Tax Rates, Stock Markets, and Growth

Abstract

Claims that increasing capital gains tax rates will adversely impact stock markets and economic growth are not strongly supported by empirical data. Over the last half-century, the correlation between the maximum capital gains tax rate and the ratio of the S&P index to GDP has been about -0.35. Also, capital gains rates display little evidence of correlation with economic growth.

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