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1 Scott Eastman, et al., Evaluating Mark-to-Market Taxation of Capital Gains 1 (2019)

handle is hein.taxfoundation/evmmktx0001 and id is 1 raw text is: Evaluating Mark-to-Market Taxation of Capital Gains Scott Eastman Taylor LaJoie Chad Qian FISCAL Federal Research Manager Policy Analyst Research Assistant FACT No. 681 Dec. 2019 Key Findings * Several politicians have suggested eliminating deferral of capital gains (appreciation in an asset's price over original purchase price) via a mark-to- market system as one way to generate revenue in a progressive manner and reduce inequality. * A mark-to-market system would tax accrued gains on assets annually and eliminate the deferral advantage of the current capital gains tax system. * A mark-to-market system would increase revenue, especially in the short term, as the government would be able to access a previously untaxed base. A mark-to-market tax regime would also provide a more accurate measure of fluctuations in wealth due to capital gains and losses year over year. * Taxing capital gains annually would improve economic efficiency by removing the lock-in effect that currently reduces government revenue and deters investors from reinvesting capital gains earnings. * A mark-to-market system would increase the tax code's burden on saving and reduce the incentive to save, potentially resulting in lower levels of saving and national income (GNI). The Tax Foundation is the nation's leading independent tax policy research organization. Since 1937, our research, analysis, and experts have informed smarter tax policy at the federal, state, and local levels. We are a 501(c)(3) nonprofit organization. @2019 Tax Foundation Distributed under Creative Commons CC-BY NC 4.0 Editor, Rachel Shuster Designer, Dan Carvajal Tax Foundation 1325 G Street, NW, Suite 950 Washington, DC 20005 202.464.6200 taxfoundation.org