Because of the locked-in effect,high capital gains tax rates may discourage taxpayer's from selling appreciated capital assets.

Question

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The locked-in effect refers to the reluctance of taxpayers to sell appreciated capital assets due to the high capital gains tax rates they would have to pay. Therefore, high tax rates can discourage selling and lead to the holding of assets for longer periods of time.

Because of the Locked-In Effect,high Capital Gains Tax Rates May