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Capital Gains Tax Cuts, Investment, and Growth

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  • Steven M. Fazzari
  • Benjamin Herzon

Abstract

Congress currently is considering changes in the capital gains tax, including reducing the rate, indexing the rate to inflation, or some combination of reduction and indexing. These changes have been advocated on the grounds that a cut in the rate will stimulate investment and economic growth. In this working paper, Research Associate Steven M. Fazzari and Benjamin Herzon, a doctoral candidate at Washington University, present a theoretical analysis of the effect of a tax cut on the cost of capital, investment, and output.
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  • Steven M. Fazzari & Benjamin Herzon, 1995. "Capital Gains Tax Cuts, Investment, and Growth," Economics Working Paper Archive wp_147, Levy Economics Institute.
    • Handle: RePEc:lev:wrkpap:wp_147
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    Cited by:

    1. Norman Schurhoff, 2004. "Capital gains taxes, irreversible investment, and capital structure," 2004 Meeting Papers 592b, Society for Economic Dynamics.
    2. Robert S. Chirinko & Steven M. Fazzari & Andrew P. Meyer, 1996. "What Do Micro Data Reveal About the User Cost Elasticity?: New Evidence on the Responsiveness of Business Capital Formation," Economics Working Paper Archive wp_175, Levy Economics Institute.
    3. Michael Hudson & Kris Feder, 1997. "Real Estate and the Capital Gains Debate," Economics Working Paper Archive wp_187, Levy Economics Institute.
    4. Michael Hudson & Kris Feder, "undated". "What's Missing from the Capital Gains Debate? Real Estate and Capital Gains Taxation," Economics Public Policy Brief Archive ppb_32, Levy Economics Institute.

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