U.S. Government Relies on Capital Gains for Tax Revenue

The U.S. stock market plays a crucial role in funding the government, with a significant share of federal tax revenue derived from capital gains, predominantly from wealthy Americans.

The top 1% owns about half of U.S. stocks; the top 10% holds over 90%.
In 2021, capital gains taxes reached 8.8% of GDP, contributing around 15% to total tax revenue.
Stock values have risen faster than wages, GDP, and money supply, exacerbating wealth inequality.
The federal government increasingly relies on rising asset values to manage budget deficits.
Policymakers aim to sustain asset price growth through low interest rates and quantitative easing.
Investment income is taxed at lower rates than labor income, costing an estimated $345 billion annually in lost tax collections.
Without substantial tax reform, reliance on stock market performance will grow, putting the federal budget at risk during market downturns.

A major market crash could lead to significant budget shortfalls for the government.