1. POLICY ANALYSIS
CAPITAL GAINS TAX POLICY
JASON COHEN
MONMOUTH UNIVERSITY
COMPREHENSIVE EXAM
DECEMBER 10, 2015
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2.  Capital gains are, “Profits from the sale of a capital
asset, such as shares of corporate stock, a business, a
parcel of land, or a piece of art” (Tax Policy Center, 2011)
 Currently at a rate of 20% for long term capital gains
once asset is sold after being raised in 2011 from 15%
 Congressional Budget Office’s (CBO) data shows
preferential tax rates on capital gains are one of the tax
expenditures that have largest effect on government
revenues
Overview
Burman L. & Rosenberg C. (2011). “Capital Gains and Dividends: How
are capital gains taxed?” Tax Policy Center. Retrieved from
http://www.taxpolicycenter.org/briefing-book/key-elements/capital-gains/how-
taxed.cfm
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3.  According to Len Burman, former director of Urban-
Brooking Institute Tax Policy Center individual income tax
shelters mostly dedicated to turning income into capital
gains
 Takes revenue away from Government and according
to a separate article by Burman, in Forbes, only top 10%
have gains on average
Problem Statement
Huang C. & Marr C. (September 19, 2012). “Raising Today’s Low Capital Gains
Tax Rates Could Promote Economic Efficiency and Fairness, While
Helping Reduce Deficits.” Center on Budget & Policy Priorities. Retrieved from
http://www.cbpp.org//sites/default/files/atoms/files/9-19-12tax.pdf
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4.  Educate taxpayers so the issue becomes
apparent and to build support for further change in
the capital gains tax policy through following means:
• Social media gorilla marketing
• Media outlets print and broadcast
• Town halls
• Focus Groups
• Surveys
• PSA’s
• Letters to Congress
Agenda Setting, Beginning
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5.  Supporters:
• Democrats, Independents, less conservative Republicans.
• Anyone earning less than $150,000 in capital gains
• Joint Committee on Taxation
• Congressional Budget Office (CBO)
• Office of Management and Budget (OMB)
• Patriotic Millionaires, a group of over 200 individuals who
make more than $1 million who have petitioned the
government to raise capital gains tax.
Agenda Setting
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6.  Opposition:
• Super wealthy
• Tea Party Republicans
• Americans for Tax Reform (ATR)
• House Committee on Financial Services
• Senate Committee on Finance
• Private equity fund and business owners who take their
compensation as capital rather than salary to avoid higher tax
Agenda Setting
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7.  CBO, OMB, Joint Commission on Taxation would
collaborate with IRS and Senate and House Committees to
evaluate potential impacts of changes and formalize the
proposed change
 Propose policy change to current capital gains tax to a
tiered structure
Four-Tier Progressive Scale: Single or Joint Filers
$250,000 and up: 33.8% (includes 3.8% Medicare tax has been
enacted.)
$150,000 to $249,999: 28%
$75,000 to $149,999: 20%
$0 to $75,000: 0%
Agenda Setting, Formulation
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8.  Ensure the general public, who does not report
capital gains, the policy change would not impact their
taxes
 Inform the top earners of capital gains of the
potential change and give them opportunity to provide
feedback or alternative
 Inform the States they do not have to change their
policies unless they choose to
 The policy change is not against the Constitution
Legitimation
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9.  Policy voted on in the House of Representatives and
Senate Committees
Policy implemented through a budget resolution
enacted by Congress.
 Once approved signed into law by President
Obama.
 Law would be carried out by IRS to ensure
compliance by tax filers
Implementation
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10.  This policy change would not require appropriations
from Congress since it is not creating a new service
 The IRS would work with CBO, OMB, Joint
Commission on Taxation to oversee the collection and
reporting of capital gains revenue and produce an
estimate of potential revenue.
Budgeting
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11. Evaluation
 The Capital Gains Tax Reform that is being
prescribed would be evaluated over a ten year horizon.
• Compare amount of revenue received by IRS before and
after increase in tax to see impact on selling capital gains
• Compare the Gross Domestic Product (GDP) year over year
to determine if potential impact of revenue is greater than any
changes to economy.
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12. Thank you!
Questions?
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