The Right Coast

Editor: Thomas A. Smith
University of San Diego
School of Law

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Thursday, February 21, 2013

Californians Pay Second Highest Capital Gains Tax Rate in the World

Tax Foundation: The High Burden of State and Federal Capital Gains Taxes:

As Congress begins to debate tax reform in the coming months, there is one tax that they should pay close attention to: the capital gains tax. The capital gains tax is a tax on profit through the sale of property or investments. At the beginning of this year, the top marginal statutory capital gains tax rate was increased to 23.8% from 15%. Although lower than the tax on ordinary income, states also tax capital gains, some of them as high as 13.3%, adding an additional tax burden to savers and investors. Some taxpayers could pay up to a 33% tax on capital gains, a rate that far exceeds rates throughout the world. This high tax rate has long-term negative implications for the economy as people save and invest less and capital seeks higher returns in other countries.


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