What is the relationship between economic growth and the capital gains tax rate?

Answer 1

Quoting: {Arguments that the maximum CGT tax rate affects economic growth are even more tenuous: Capital gains rates display no contemporaneous correlation with real GDP growth during the last 50 years. Although the effect of capital gains on economic growth may occur with a lag, Burman (1999)1 tests lags of up to five years and finds no statistically significant effect.}

Answer 2

Roughly negative. Lower taxes in general encourage economic growth, although below a certain point there is either a minimal effect or a possibly inverse effect (such as the point at which government solvency discourages economic development).

In specific, capital gains taxes impact the demand for investments, whether real (land, buildings, commodities) or security (stocks, options). Where the portion of the economy involved in these markets is very small, an increase or decrease in the capital gains rates will have less effect than where there are a larger number of speculators.

Answer 3

higher the economic grow......the better capital gains and higher the collection.....so rate may be reduced to match the budgeted amount.....
vice versa...higher the capital gain tax....lower the income....lesser money availble of economic growth (from investors point of view but from government point of view the opposite hold good),,,