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

2021 Tax Brackets

October 27, 2020

Tracking the 2020 Presidential Tax Plans

October 21, 2020

Reviewing Joe Biden’s Tax Vision

August 20, 2020

Where Does Kamala Harris Stand on Tax Policy?

August 12, 2020

The Impact of a Financial Transaction Tax

January 23, 2020

Capital Gains Taxes in Europe

December 5, 2019


Related Articles

The Drawbacks of State Taxes on Financial Transactions

2020 Spanish Regional Tax Competitiveness Index

Taxes and New York’s Fiscal Crisis: Evaluating Revenue Proposals to Close the State’s Budget Gap

A Preliminary Look at 2019 Tax Data for Individuals

Comparing Europe’s Tax Systems: Individual Taxes

2021 Tax Brackets

Tracking the 2020 Presidential Tax Plans

How Should Wealth and Work Be Treated in the Tax Code?

New York Stock Exchange Signals Willingness to Relocate Servers to Avoid Proposed New Jersey Financial Transaction Tax

Reviewing Joe Biden’s Tax Vision

Where Does Kamala Harris Stand on Tax Policy?

New York and New Jersey Consider Financial Transaction Taxes

Capital Gains Tax Rates in Europe

In Some States, 2020 Estimated Tax Payments Are Due Before 2019 Tax Returns

Dividend Tax Rates in Europe

Analysis of Capital Gains Tax Proposals Among Democratic Presidential Candidates

Analysis of the Economic, Revenue, and Distributional Effects of Repealing Step-up in Basis

Recent Study on Financial Transaction Taxes Understates their Economic Harm

Bloomberg’s Financial Transaction Tax (FTT) Proposal Revives Bad Policy

Sources of Government Revenue in the OECD