Capital gains are taxed at a different rate than income and this reduces revenues the government receives. All else equal, what would happen if capital gains taxes were eliminated?

Question

Quizplus · Accepted Answer

Eliminating capital gains taxes would reduce government revenues, leading to an increase in the deficit as the government would still need to fund its programs and services. Option A and D are incorrect as they are not practical solutions, and option B is incorrect because only those who have capital gains would benefit from the elimination of the tax, causing greater income inequality.

Capital Gains Are Taxed at a Different Rate Than Income