- The document compares historical stock, bond, bill, and inflation returns from 1926-2011, both before and after taxes. It shows that taxes significantly reduce investment returns, with stocks earning 9.8% before taxes but only 7.7% after taxes over the period studied.
- Lower capital gains tax rates in recent decades have benefited stocks by reducing the difference between pre-tax and after-tax returns, especially for longer holding periods like 10 or 20 years.
- Tax-deferred retirement accounts provide higher overall returns than taxable accounts due to deferring taxes until withdrawal, as shown in an example of $10,000 invested for 40 years.