Tax Blog
Would only real interest earnings be taxed?
Would there be an end to taxing capital gains?
Would it increase the average tax rates?
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Tax Questions & Answers
In the US long term capital gains is already tax at a rate less than ordinary income and most capital gains are due to a real increase in value, so it would not make much difference. about 20% of income goes to debt payments but probably less than 3/4 would be real so as a rough estimate 5% of tax revenue would be lost. To keep revenue the same would require an increase in income taxes rates of about 5%. Since much of the interest is for home mortgages or business expenses which are tax deductible, some of the lost tax payments could be made up by only allowing deductions for real interest paid.