But the gist is that when you plot the capital gains rate and stock market curves on the same graph, there's no dependency, which is counter-intuitive. However,
1) Endowments, pension funds and 401k's don't care about capital gains tax rate as they're shieleded at 0%
2) Foreign buyers are exempt from US rates as long as they pay their home country rates and there's a double-taxation agreement in place
3) People don't choose to buy less, people just choose to sell less. Combined with fairly stable demand generated from (1) and (2) the price of quality assets actually tends to grow faster in high-capital-gains-tax years than in low-capital-gains-tax years.
What's correlated with higher capital gains taxes is brokerage profits - sellers don't sell as frivolously.
Your entire premise is flawed since they all apply to companies in the stock market not a company sale. It's unrelated to my original statement but....
Investment vehicles, such as a 401k, do pay capital gains taxes just not on the sale they pay when the individual pulls the money out of the account.
You're arguing for less liquidity in the market? Liquidity is a good thing because it allows the market to more efficiently deploy capital.
PS... correlation does not equal causation otherwise the amount Chocolate eaten per capita has direct effect on the number of Nobel Prize winners.
> all apply to companies in the stock market not a company sale
Nope. First off, companies in the stock markets sell, too. Second off, tax-free vehicles are used for investments in private equity, venture capital, real estate, etc.
> Investment vehicles, such as a 401k, do pay capital gains taxes just not on the sale they pay when the individual pulls the money out of the account.
Nope. It's all treated as regular income at the time of withdrawal, so former and current capital gains rates have no effect.
I agree with your argument on liquidity - I don't argue for it, I'm just saying that net effects from increased capital gains are far more subdued than apocalyptic scenarios people usually attach to them. Excess liquidity also generates bubbles, so there's a fine line you have to walk where even though you can get a no-documents loan to buy up dozen of new real estate properties, you probably shouldn't.
But the gist is that when you plot the capital gains rate and stock market curves on the same graph, there's no dependency, which is counter-intuitive. However,
1) Endowments, pension funds and 401k's don't care about capital gains tax rate as they're shieleded at 0%
2) Foreign buyers are exempt from US rates as long as they pay their home country rates and there's a double-taxation agreement in place
3) People don't choose to buy less, people just choose to sell less. Combined with fairly stable demand generated from (1) and (2) the price of quality assets actually tends to grow faster in high-capital-gains-tax years than in low-capital-gains-tax years.
What's correlated with higher capital gains taxes is brokerage profits - sellers don't sell as frivolously.