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graph of tax RATE vs. tax REVENUE
Those who want the rich to pay their "fair share" usually advocate raising the tax rate as high as possible; this group generally consists of Democrats.
Those who want the rich to pay their "fair share" usually advocate raising the tax rate as high as possible; this group generally consists of Democrats.
[[Image:Cap gains tax.gif|right|thumb|''Source: US Gov't'']]
Others have predicted that reducing the capital gains tax rate can actually increase the amount of revenue the tax generates (see [[Laffer curve]]). People tend to hold on to stocks or other investments when selling them causes their profit to be reduced too much by taxation. So, increasing the tax rate paradoxically reduces the amount of tax revenue. This is like when a store raises its prices, only to find that sales diminish. The idea is to increase the sales price to increase profit, but without passing the point of [[diminishing returns]].
Others have predicted that reducing the capital gains tax rate can actually increase the amount of revenue the tax generates (see [[Laffer curve]]). People tend to hold on to stocks or other investments when selling them causes their profit to be reduced too much by taxation. So, increasing the tax rate paradoxically reduces the amount of tax revenue. This is like when a store raises its prices, only to find that sales diminish. The idea is to increase the sales price to increase profit, but without passing the point of [[diminishing returns]].