Center for Federal Tax Policy

Individual Capital Gains and Dividends Taxes

The taxation of dividends and capital gains is one of the most controversial issues in public finance. Relatively high effective tax rates on capital income, particularly that emanating from the corporate sector, have the potential to discourage investment and impede economic growth. Corporations must pay corporate income taxes on profits before they distribute dividends to shareholders, and shareholders pay an additional, individual-level tax on those amounts. Imposing two layers of taxation on corporate income can result in a total tax rate on capital income from corporations that is substantially higher than the rate on other types of income. In recent years, policymakers have become concerned about the economic damage caused by relatively high effective tax rates on capital income, and in 2003 the tax rate on capital gains and dividend income was lowered to 15 percent.


Featured Research

Unpacking Biden’s Tax Plan for Capital Gains

July 31, 2019

Are Opportunity Zones Working as Intended?

June 26, 2019

Measuring Opportunity Zone Success

May 29, 2019

An Overview of Capital Gains Taxes

April 16, 2019

Tax Policy and Entrepreneurship: A Framework for Analysis

April 3, 2019

Opportunity Zones: What We Know and What We Don’t

January 8, 2019


Related Articles

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Does Andrew Yang’s “Freedom Dividend” Proposal Add Up?

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Senator Van Hollen Introduces Proposal to Raise Taxes on High-Income Households

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Are Opportunity Zones Working as Intended?

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Tax Policy and Entrepreneurship: A Framework for Analysis

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Is Increasing the Capital Gains Tax Rate the Right Way to Generate Revenue?

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The Trade-offs of Repealing Step-Up in Basis

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Unclear if Warren’s Wealth Tax Proposal is Constitutional

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Opportunity Zones: What We Know and What We Don’t

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2019 Tax Brackets

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Treasury Department Proposes New Regulations for Opportunity Zones

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Sources of Personal Income 2016 Update

September 11, 2018

Economic and Budgetary Impact of Indexing Capital Gains to Inflation

September 4, 2018

Second Round of Tax Reform Might Address Retirement Accounts

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The Complicated Taxation of America’s Retirement Accounts

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