Employment Effects of Reducing Capital Gains Tax Rates in Ohio
Entrepreneurial activity is a key driver of job creation, and entrepreneurs and their financiers are especially sensitive to capital gains taxes. As a result, a cut in the capital gains tax rate should be expected to stimulate job creation to some degree. We measure the magnitude of this effect by examining the treatment of capital gains across the 50 states over roughly the past 40 years. Our results suggest that a complete elimination of the taxation of capital gains realized by Ohio taxpayers would lead to the creation of 40,000 new jobs. Applying this estimate to proposals currently under discussion suggests a somewhat smaller effect.
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Ricardo O. Cavalcanti & Andrés Erosa, 2007. "A theory of capital gains taxation and business turnover," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 32(3), pages 477-496, September.
- Daniel Feenberg & Elisabeth Coutts, 1993. "An introduction to the TAXSIM model," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 12(1), pages 189-194.
- Cullen, Julie Berry & Gordon, Roger H., 2007. "Taxes and entrepreneurial risk-taking: Theory and evidence for the U.S," Journal of Public Economics, Elsevier, vol. 91(7-8), pages 1479-1505, August.
- Jon Bakija, 2006. "Documentation for a Comprehensive Historical U.S. Federal and State Income Tax Calculator Program," Department of Economics Working Papers 2006-02, Department of Economics, Williams College, revised Aug 2009.
When requesting a correction, please mention this item's handle: RePEc:ken:wpaper:1101. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jay Corrigan)
If references are entirely missing, you can add them using this form.