The Effect on Revenues: How do Capital Gains Tax Rises Causes Them

When capital gains tax rises are being proposed in the UK as a short-term measure to increase revenues, it is important for policymakers to have a full understanding of the likely effect of such rises on Government revenues. Capital gains tax rates in the USA have changed considerably up and down in recent years and decades and provide a rich seam of data with which one can come to solid conclusions on the revenue effects of such changes. This policy briefing summarizes those revenue effects, considering evidence from other countries too, and draws conclusions for UK policymakers. The current policy debate in the UK is being conducted amidst a remarkable absence of facts. Policymakers need to proceed carefully and ensure they take an evidence-based approach in order to avoid unforeseen negative consequences of rushed, ill-informed decision-making.