The tax law provides preferential rates on certain capital gains to encourage investment and stimulate economic growth.
In the United States, the tax law provides preferential rates on certain capital gains to encourage investment and stimulate economic growth.
When individuals or businesses make investments in assets such as stocks, real estate, or businesses, they may earn capital gains when they sell those assets at a higher price than their purchase price. Capital gains are taxed at different rates depending on how long the asset was held before it was sold.
By providing preferential rates on certain capital gains, the tax law aims to incentivize individuals and businesses to invest their money in productive assets. Lower capital gains taxes make investing more attractive, as individuals can keep a higher portion of their investment returns. This, in turn, encourages economic growth as more funds are channeled into productive investments.