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A General Equilibrium Analysis of a Reduction in Capital Gains Taxes

Author

Listed:
  • Barry J. Seldon

    (University of Texas at Dallas)

  • Roy G. Boyd

    (Ohio University)

Abstract

The authors analyze the general equilibrium effects of reducing capital gains taxes in a computable general equilibrium (CGE) model. The CGE approach allows the examination of the impact of the tax reduction on the various sectors of the economy. Of special interest is the distributive effects of the tax reduction, measured in this study by the changes in income and utility among six income classes. Positive gains are enjoyed in all six income classes, with the highest percentage increases going to the lowest income class. Of 14 consumption sectors, the largest percentage increase is in savings. This bodes well for future economic growth.

Suggested Citation

  • Barry J. Seldon & Roy G. Boyd, 1995. "A General Equilibrium Analysis of a Reduction in Capital Gains Taxes," Public Finance Review, , vol. 23(2), pages 193-216, April.
    • Handle: RePEc:sae:pubfin:v:23:y:1995:i:2:p:193-216
    DOI: 10.1177/109114219502300204
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    References listed on IDEAS

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    5. Roy Boyd & David H. Newman, 1991. "Tax Reform and Land-Using Sectors in the U.S. Economy: A General Equilibrium Analysis," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 73(2), pages 398-409.
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    8. Hendershott, Patric H. & Toder, Eric J. & Won, Yunhi, 1991. "Effects of Capital Gains Taxes on Revenue and Economic Efficiency," National Tax Journal, National Tax Association;National Tax Journal, vol. 44(1), pages 21-40, March.
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