Capital Gains Taxes: Distributional Effects (CRS Report for Congress)
Premium Purchase PDF for $24.95 (13 pages)
add to cart or
subscribe for unlimited access
Pro Premium subscribers have free access to our full library of CRS reports.
Subscribe today, or
request a demo to learn more.
| Release Date |
Sept. 24, 1999 |
| Report Number |
RL30317 |
| Report Type |
Report |
| Authors |
Jane G. Gravelle, Government and Finance Division |
| Source Agency |
Congressional Research Service |
Summary:
Many types of data have been presented to illustrate who pays capital gains taxes (and who might
benefit from a reduction in these taxes). These different approaches include absolute measures of
distribution (such as how the tax is distributed relative to the distribution of the population and the
average tax paid), relative measures of distribution (whether after-tax incomes would become more
or less equal without the tax), measures of the distribution of tax liability, and measures of who pays
the tax.
These measures are presented for 1999 and indicate that capital gains taxes are concentrated
among high income individuals. Those with earnings over $200,000, who constitute the top 1.8
Percent of income, account for 78.6 percent of capital gains taxes. While the average capital gains
tax paid is $476, the average for the highest income class is $20,536 and the average for the bottom
half is less than $10. Capital gains taxes contribute to a progressive tax system: while capital gains
taxes average 1.3 percent of disposable income, they account for 5.7 percent in the highest income
bracket and less than one tenth of one percent for the bottom 70 percent of the population.
Some of this concentration in higher income classes occurs because of the concentration of
taxes at higher income levels. However, capital gains taxes are also concentrated relative to other
taxes. The capital gains tax is 4.5 percent of total federal income, payroll and excise taxes; however,
it is 14 percent of total taxes in the highest income bracket, and less than one half of one percent for
the bottom 70 percent of the population. For the income tax alone, capital gains taxes are 8.1 percent
of total income taxes, but 16.2 percent of income taxes in the top income class. In the bottom 70
percent of the distribution, the capital gains tax is less than one percent of income taxes.
About a quarter of taxpayers who pay a capital gains tax are in the bottom 70 percent of the
distribution, while 11 percent of capital gains taxpayers are in the top 1.8 percent of the population.
About 12 percent of all taxpayers pay a capital gains tax; in the highest income class, 75 percent pay
a capital gains tax.
This report will not be updated unless new data become available.
