Maximum Tax Rates On Capital Gains & Ordinary Income, 1954-2013

Maximum Tax Rates On Capital Gains & Ordinary Income, 1954-2013

Despite broad citizen opposition to the idea of lowering taxes on the wealthy, Congress has taken repeated action to lower the capital gains tax rate. It lowered taxes on capital gains in 1997, again in 2001, and once more in 2003. (Congress also sharply cut the top rate on dividend income in 2003.) As a result of these changes, the tax rate on capital gains reached a near-record low during the late 1990s up through 2012. The top tax rate for capital gains was increased at the end of 2012 to 20 percent, as part of the “fiscal cliff” deal. Figure 4 plots the increases and decreases in the capital gains tax rate, concluding with the current rate of 20 percent.

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