Taxing Capital Income: Effective Rates and Approaches to Reform

摘要

In the United States, roughly 60 percent of federal receipts derive from what are termed income taxes-either the individual income tax or the corporate income tax. Income taxes generally include income generated by capital as well as labor. A number of analysts argue that taxing capital income imposes significant costs on the overall economy because such taxation affects investment and the allocation of that investment. As a result, proposals for comprehensive tax reform at the federal level typically include options such as value-added taxes, retail sales taxes, and the so-called flat tax-none of which tax capital income-as possible replacements for income taxes.