The IMF Working Papers series is designed to make IMF staff research available to a wide audience. Almost 300 Working Papers are released each year, covering a wide range of theoretical and analytical topics, including balance of payments, monetary and fiscal issues, global liquidity, and national and international economic developments.
This paper reviews the literature on the revenue implications of a lower capital gains tax rate in the United States. The existing empirical research indicates that the timing of realizations is sensitive to tax changes but is inconclusive on the long-run revenue implications. No study claims that tax revenues would increase very much on a permanent basis. The paper concludes that other aspects of a lower capital gains tax rate deserves more attention, in particular its impact on resource allocation and tax arbitrage.