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1 Arthur P. Hall, 50 Years of the Federal Capital Gains Tax Burden 1 (1995)

handle is hein.taxfoundation/srefxz0001 and id is 1 raw text is: TAX 4tu- FOUNDATION March 1995 Number 45 50 Years of the Federal Capital Gains Tax Burden l)uring each of the 50 tax years from 1942 through 1992, almost every income group has borne some share of the federal capital gains tax burden. Figure I reveals that, on an aver- age annual basis, taxpayers making under $100,000 annually (in constant 1992 dollars) have paid almost one-third of all capital gains taxes. The remaining two-thirds of the capital gains tax burden has been split almost equally between the $1 00,000-to-$500,000 and the over-$5()O,O()O income groups. Figure 2 depicts the tax base for the capi- tal gains tax burden in Figure 1 - that is, each income group's share of the 50-year cumulative dollar amount of capital gains subject to the federal income tax. It shows that taxpayers with under $100,000 in annual income have reported more than one-third of the taxable capital gains over the 1942-to-1992 time pe- riod. The remaining share is, again, split al- most equally between the $100,000-to- $500,000 and the (ver-$500,000 income groups. To some degree, the distribution of tax- able gains reported in Figure 2, and, there- fore, the tax burden reported in Figure 1, are biased toward the upper-income groups. This bias results from the use of current-year Figure 1 Income Groups' Shares o/ tota/lCapital Gains 1(Ixes 1942-1992 Under $25K 3.0% Over $500K 31.7% Over $500K 34.8% $200-$500K 17.3% $50-$100K 18.3% $100-$200K 17.8% $200-$500K 15.0% Source. Tax Foundation. Source: lax Foundation By ArthurP. Hall, Ph.D. Senior Economist Tax Foundation Figure 2 Income Groups' Shares of lotal laxable Capital Gains 1942-1992 Under $25K 7.2% 1 $25-$50K 12.0% $50-$100K 18.7% $100-$200K 15.4% Source: Tax Foundation. Source: Tax Foundation.

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