No. of Recommendations: 3
With higher rates asset holders are deterred from selling at all resulting in the paradox of overall lower tax revenue. There's also a economic efficiency argument against keeping funds in less productive assets that would still trigger heavy taxes if sold.https://taxfoundation.org/data/all/federal/federal... is a relevant dataset in this regard. I would not cite any of the analysis on this site, which is a mouthpiece for business interests - but the dataset itself appears directly drawn from Treasury resources so is likely reliable. Historically, apparently the avg. effective tax rate on capital gains was right around 14-16% for much of the 1954-2018 span covered in the dataset, going up a bit in response to changes in the
maximum capital gains rate.
There are a lot of ways to slice the dataset to support whatever interpretation suits one's interests, but trying to be objective, I don't see a strong relationship between increased maximum CG rates and decreased CG tax revenue as a fraction of GDP (which is all that's present in the numbers here), or evidence that higher CG taxes deter people from selling "at all". Trying to tease out the effects of market levels / "exuberance" from tax rates would be a project. Also the peak contribution of CG taxes has almost always been ca. 2-3% of the federal budget, largely independently of rates.
BTW while I can't speak to the other countries you list, NZ does not have a CG tax on NZ/AUS shares but does have an "FIF" tax on other foreign shares. Perhaps most NZ investors confine themselves to the local options, though.
