The Penn Wharton Budget Model, a nonpartisan research initiative by the University of Pennsylvania’s Wharton School, recently published mini-guides outlining candidates’ policy proposals and their respective fiscal effects and consequences for the U.S. economy.
One of these guides focused on President Donald Trump’s proposed capital gains and dividend tax cut.
PWBM estimates that reducing the top preferential rates on capital gains and dividends from 20% to 15%, an intention confirmed by National Economic Council director Larry Kudlow in August, will cost $98.6 billion over the 10-year budget window.
This tax cut will benefit only tax units in the 5% of the income distribution, with 75% of the benefit accruing to those in the top 0.1% of the income distribution.
According to PWBM, the tax brackets that set the tax rates for capital gains and dividends are determined by level of taxable income.