So, two years ago, I wrote this essay on the same topic, and the content seems to have changed very little, even if I think the writing style and awareness of what’s going on behind it have improved.
It’s been suggested that a reduction in capital gains tax would increase investment, thereby boosting the economy, creating jobs, and improving the general welfare of all members of society, but that class envy unfortunately makes this politically impossible because the gains favor the rich.
There are a few important considerations here. How does a reduction in the capital gains tax affect the economy? How would those effects be distributed, especially with respect to wealth? What are the consequences of the loss in government revenue? Who are the citizens that lose most in terms of the government programs and benefits lost?
Past investments are suddenly effectively worth more to investors than they originally were. What are the consequences of this immediate wealth for the already wealthy? Will it increase inflation, and if so, how much? Will it create new jobs throughout the income distribution, and, to the extent that new investment creates jobs, will it compensate for inflationary losses?
Given some time to look into these questions, I would look for data on past changes in the capital gains tax rate and market investment, as well as economic indicators such as inflation, the unemployment rate, gdp and gdp growth, and metrics of economic inequality. I would see what work others have done before in response to these concerns, and attempt to verify their findings, or, in the unlikely event that this field has not already been thoroughly explored, attempt to empirically determine the relationships for myself. Specifically, I would be interested in investment and the capital gains tax vs economic growth, unemployment, and inequality, as well as the the relationships between economic growth and inequality and unemployment.
And a special thank you to