This blatant form of double taxation is a particularly harsh burden on owners of farms and small businesses, many of which are sold just to pay the estate taxes. Perhaps more than any other tax, this death levy drains capital from the economy and hinders future prosperity. In addition, the estate tax could very well be costing the government revenue. 4 Cut the capital gains tax by 50 percent. Like the estate tax, the capital gains tax is a discriminatory form of double taxation.
Individuals earn money and pay taxes on that income.
If they decide to save and invest the income that is left after paying taxes, the government punishes them by taxing any increase in the value of the assets they acquire. The tax code does not even protect taxpayers from inflation in computing tax liability. The capital gains tax, like the estate tax, also imposes a harsh penalty on savings and investment and depresses the amount of capital formation that is needed to finance future economic growth. The only proper capital gains tax rate is zero, a fact that many of America's trading partners, such as Germany, South Korea, Taiwan, the Netherlands, and Hong Kong, already understand. Reducing the rate in America by 50 percent, from 28 percent to 14 percent, would be a good step toward the ultimate elimination of this onerous burden.