LAST year’s capital-gains tax cut has caused a tidal wave of new capital-gains tax collections, just as supply-siders always predicted. New data from the Joint Tax Committee prove the point.
A reduction of nearly 30 per cent in the capital-gains tax has created a 25 per cent surge in revenues. For opponents of supply-side economics, who doubt that tax rates affect behavior, this is hard to explain. Yet it’s consistent with the last forty years of evidence on capital-gains taxes. Every rate increase has led to less revenue, and every rate cut has led to more. In public finance, this is about as immutable a law as Newton’s.
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