what is good about reducing the capital gains tax rate 
proponents of a low rate on capital gains argue that it is a great incentive to save money and invest it in stocks and bonds that increased investment fuels growth in the economy businesses have the money to expand and innovate creating more jobs they also point out that investors are using after tax income to buy those assets the money they use to buy stocks or bonds has already been taxed as ordinary income and adding a capital gains tax is double taxation 19the bottom linecapital gains taxes are levied on earnings made from the sale of assets like stocks or real estate based on the holding term and the taxpayer s income level the tax is computed using the difference between the asset s sale price and its acquisition price and it is subject to different rates correction jan 9 2024 a typo was updated to correctly state the income rate for married filing jointly row of the 2024 tax rates for long term capital gains chart correction april 9 2024 this article has been edited to explain that short term gains on collectibles are taxed as ordinary income and long term gains on collectibles have a cap of 28 