NCPA - National Center for Policy Analysis

Latest Vindication Of Supply-Side Economics

March 13, 1998

Following last year's federal tax cut in the capital gains rate -- from 28 percent to 20 percent -- revenues flowing into the Treasury just keep mounting.

  • So far in Fiscal Year 1998, revenues from capital gains are running $33.4 billion ahead of the same four-month period last year in inflation-adjusted terms.
  • During the same period, tax revenues have increased by 10.5 percent from the same period in fiscal 1997.
  • In real terms, capital gains have contributed a $15 billion revenue rise during the 7-year-old economic recovery.
  • Experts are predicting considerably more capital gains related revenue increases during the months ahead.

This is because rising stock markets seldom if ever point to near-term significant recessions or growth pauses. Experts say that after stalling out between last June and January, the fact that major U.S. stock indexes are now setting new records is an indication that American economic growth for at least the next six to nine months will sustain at least a 3 percent rate or better.

Source: Lawrence Kudlow, "Lifting All Boats Against the Tide," (American Skandia Life Assurance Corp.), Washington Times, March 13, 1998.


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