What's Missing from the Capital Gains Debate? Real Estate and Capital Gains Taxation
Public Policy Brief No. 32
Posted: 12 May 1998
Date Written: February 1997
The recent enactment of a capital gains tax cut resulted, according to Hudson and Feder, from the absence of a true appreciation or consideration of the real beneficiaries of such a cut, its probable actual effects, the distinction between productive and nonproductive sources of capital gains (two-thirds of capital gains accrue to real estate, which is a fixed, nonproductive asset), and distortions in our current income accounting system (which shield most real estate income from taxation). The across-the-board cut, which treats real estate appreciation and true capital gains as the same, is a giveaway to real estate and will steer capital and entrepreneurial resources to a search for unearned income.
JEL Classification: H21
Suggested Citation: Suggested Citation