One of the reasons for the favourable tax treatment of capital gains is that the amounts received often have to be reinvested in the business in order to maintain its productive capacity.

Question

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Capital gains, which refer to profits made from the sale of assets such as stocks and real estate, are often reinvested back into the business to maintain or grow its operations. As such, tax policies may treat capital gains more favourably as a way to incentivize investment and economic growth.

One of the Reasons for the Favourable Tax Treatment of Capital