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1 Tyler Parks, Looking Back on Taxation of Capital Gains 1 (2020)

handle is hein.taxfoundation/lkbtxc0001 and id is 1 raw text is: Looking Back on Taxation of Capital Gains Tyler Parks Policy and Outreach Associate Key Findings * A lookback charge is in addition to traditional income taxes due on the realization of a capital gain. * In an ideal setting, the lookback charge eliminates the benefit of deferral and removes the lock-in effect, a design flaw in the current system of realization-based taxation of capital gains. * Taxing capital gains with a lookback charge does have several advantages over mark-to-market taxation, such as preserving liquidity for taxpayers and eliminating valuation challenges for hard-to-value assets. * However, a lookback charge faces administrability issues, encourages investors to seek higher returns, and raises taxes on U.S. savers. 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 global levels. We are a 501(c)(3) nonprofit organization. @2020 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 FISCAL FACT No. 689 Jan. 2020