Research Report Capital Gains Taxation
From The Encyclopedia of Taxation and Tax Policy
Gerald Auten
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Under a pure net accretion (Haig-Simons) approach to income taxes, real capital gains would be taxed each year as they accrued and real capital losses would be deducted. Capital gains are generally taxed only when "realized" by sale or exchange, however, because it would be difficult to estimate the value of many assets, ait would be viewed as unfair to tax income that had not been realized, and it could force the liquidation of assets to pay the tax on accruals. Taxation upon realization, however, leads to other problems, which require policy compromises. This article provides a current law and the history of capital gains taxation, as well as economic issues in capital gains taxation.
Research Areas Taxes and budgets
Tags Individual taxes Federal budget and economy
Policy Centers Income and Benefits Policy Center