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I don't really have an opinion on what the optimal capital gain tax rate is, but wrt your specific point of capital being mobile in the sense of being able to e
by _yosefk 11y ago
I don't really have an opinion on what the optimal capital gain tax rate is, but wrt your specific point of capital being mobile in the sense of being able to evade a higher tax rate (as opposed to being mobile in the sense of being able to choose what to invest in) - I'm not sure it is except for the few very, very rich people. If an American divests from US stocks and reinvests the capital in European or Asian stocks, AFAIK they still have to pay taxes for their capital gains, and Americans specifically even have to pay capital gain taxes if they move elsewhere, unless they renounce their citizenship. Certainly pension funds managing the capital of millions of Americans will pay a higher capital gain tax regardless of where they invest the capital and millions of Americans will not emigrate as a result. As to corporations, the US is making it tougher to escape its unusually high tax rate on profits by targeting "inversions" right now.
So while I'd guess that higher taxes will hurt growth at some point, I'm not sure that they're that easy to escape; perhaps I'm missing some obvious loopholes.
- golergka 11y agoUhm, but private citizens don't usually invest themselves — if I understand correclty, typical 401k (or whatever american pension plans based on investments is called) is invested into huge funds and banks, which operate trillions of dollars in assets and can move them all over the world.
- _yosefk 11y agoMove - yes, but does this stop the government from collecting the capital gains tax? I think not. So if you make American companies less profitable through some regulations, capital will move elsewhere, but if you raise the capital gains tax, I'm not sure it will.