Historical Effective Marginal Tax Rates on Capital Income

Publication Date: January 2004

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: Banking and finance

Type:

Abstract:

Effective marginal tax rates on investment are forward-looking estimates that project over the lifetime of an investment what share of the return will effectively be paid in taxes. These rates can differ significantly from average tax rates measured by dividing tax liability by income, because they are affected by timing. Effective tax rates fell from the early 1950s through the mid-1960s, rose until the early 1980s, and then dropped. They have stayed about the same until relatively recently, when they fell to an all-time low with bonus depreciation, relief of double tax on dividends, and lower marginal tax rates. This report will be updated as warranted.