Skip to content

Taxing Savers and Investors

The United States has long been a forward-thinking country that builds for tomorrow through saving, investment, and entrepreneurship. Saving gives us security, investment gives us rising incomes through enhanced productivity, and entrepreneurship drives economic growth and dynamism, creating new opportunities.

However, over the last fifty years, all three have been eroded. Citizens aren’t saving enough, businesses aren’t investing enough, and the country is undergoing a retreat in the level of economic growth and dynamism.

As it is, the U.S. tax code places substantial burdens on each of these essential factors of our economy. What’s worse, while other nations have become more attractive, there has been a proliferation of proposals in the U.S. that would only cause further harm—wealth taxes, “mark-to-market” capital gains taxes, estate taxes, and financial transaction taxes.

Below, we offer in-depth analysis of these and other proposals, which highlight a harmful trend in tax policy. Americans are industrious, entrepreneurial, and innovative. Policymakers should ensure we have a tax code that enhances those qualities, not hinders them.

All Related Articles

business survival, high tax rates, American entrepreneurship, International Monetary Fund

New Study Finds that High Tax Rates Lower the Chance of Business Survival

America’s tax code distorts the economic decision-making of firms, such as the favorable treatment of debt financing over equity. This study adds to this argument while providing motivation for policymakers to focus on how reforms to tax policy can increase American entrepreneurship.

2 min read
capital gains taxes, high capital gains tax rates

An Overview of Capital Gains Taxes

Capital gains taxes create a burden on saving because they are an additional layer of taxes on a given dollar of income. The capital gains tax rate cannot be directly compared to individual income tax rates, because the additional layers of tax that apply to capital gains income must also be part of the discussion.

14 min read
entrepreneurship, tax policy and entrepreneurship, entrepreneur taxes

Tax Policy and Entrepreneurship: A Framework for Analysis

A key element of America’s dynamism problem is a drop in entrepreneurship. Removing tax barriers for entrepreneurs would improve America’s dynamism while making America’s tax code more neutral, efficient, and simple for all taxpayers.

25 min read
high tax rate innovation inventors

A High Tax Rate on Star Inventors Lowers Total Innovation

Findings from a new study suggest that while a policy agenda to revive innovation must include an assortment of changes – including greater access to mentorship – tax policy matters too.

2 min read
Money, The Real Lesson of 70 Percent Tax Rates on Entrepreneurial Income, U.S. tax code progressive tax code, income inequality, Saez and Zucman, income tax rich

The Real Lesson of 70 Percent Tax Rates on Entrepreneurial Income

The fall and then rise of entrepreneurial income claimed on the wealthy’s 1040 tax returns clearly tracks the seeming decline of inequality from 1950 to 1980, followed by the sudden rise in inequality since 1986. The shifting composition of income claimed by the rich due to changes in tax laws explains this illusion.

12 min read
Sen Elizabeth warren wealth tax. wealth tax senator warren

Sen. Warren’s Wealth Tax Is Problematic

Sen. Elizabeth Warren recently proposed a wealth tax on high-net-worth individuals, a type of tax that is poorly targeted, difficult to administer, and raises constitutional questions.

4 min read
Comparing 2020 income tax proposals by Joe Biden, Pete Buttigieg, Bernie Sanders, and Elizabeth Warren. Trump payroll tax proposal

Losing the Future: The Decline of U.S. Saving and Investment

Saving and investment are necessary for a society to adequately provide for its future. Saving and investment have declined substantially as a percentage of GDP over the last 40 years. American private saving barely keeps pace with total government deficits. On the whole, the country saves very little. American investment barely keeps pace with depreciation; U.S. private and public capital stock and infrastructure deteriorates almost as quickly as it can be repaired or replaced with new investment.

15 min read