The capital gains rate has fluctuated from a high of nearly 40 percent in the late 1970s to 28 percent after former President Ronald Reagan’s tax cuts of 1986, and has been at the current 20 percent since 2013.
Gates hasn’t gone into detail on how to raise the capital gains rate. His $98.5 billion net worth includes the charitable Bill & Melinda Gates Foundation. With nearly $51 billion in endowment assets as of the end of 2017, the foundation is fueled mainly by profits from Microsoft stock and dividends through Cascade Investment, his holding company.
Economists debate whether reducing the rate would spur or retard economic growth and charitable giving.
Raising it 5 percentage points to 25 percent would produce less than $25 billion in revenue over a decade through 2027, according to Tax Policy Center estimates. Meanwhile, Sanders estimates that his increase on billionaire estates alone would raise up to $2.2 trillion. Warren’s plan would raise $2.75 trillion over 10 years, according to her campaign.
Spiegel, echoing an argument often heard on Wall Street, said that reducing the benefit would prompt wealthy investors to work less. “Chances are the guy making $10 million a year in capital gains and income is working 80 hours a week” -- and if top incomes bear more tax, “that guy’s not going to work more, and instead go hang out on the tennis court or boat all day.”
This article was provided by Bloomberg News.