@article{171541,
  author = {Ole Agersnap and Owen Zidar},
  title = {The Tax Elasticity of Capital Gains and Revenue-Maximizing Rates},
  abstract = {<p>This paper uses a direct-projections approach to estimate the effect of capital gains taxation on realizations at the state level and then develops a framework for determining revenue-maximizing rates at the federal level. We find that the elasticity of revenues with respect to the tax rate over a 10-year period is\&nbsp;-0.5 to\&nbsp;-0.3,\&nbsp;indicating that capital gains tax cuts do not pay for themselves and that a 5 percent- age point rate increase would yield $18 to $30 billion in annual federal tax revenue. Our long-run estimates yield revenue-maximizing capital gains tax rates of 38 to 47 percent.</p>
},
  year = {2021},
  journal = {American Economic Review: Insights},
  volume = {3},
  pages = {399-416},
  url = {https://pubs.aeaweb.org/doi/pdfplus/10.1257/aeri.20200535},
  language = {eng},
}