This brief provides a new analysis of the macroeconomic effects of raising taxes on dividend income and capital gains. Increasing dividend income and capital gains taxes from 20% to 39.6% for households earning over $1 million would raise government revenue by about 5% and GDP by about 1% in the long term. The proposed tax increase would increase income for lower- and middle-income households, while households at the top would see a significant decline in income. Because dividend income and capital gains are enjoyed largely by the wealthiest members of society, increasing taxes on income from these sources can play a crucial role in mitigating income and wealth inequality.
This report is part of IMPA’s series on personal income tax policy. Check our publications page for the latest reports and analysis from IMPA.
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