Capital Gains Income Is Volatile, New Congressional Study Shows

“More variable over time than other major sources of income”

Capital gains income varies widely from year to year, not only because of market fluctuations, but in part because taxpayers frequently have some discretion about the timing when it comes to either realizing or deferring gains. Source: Congressional Budget Office.

Just as I was preparing a follow-up post to Monday’s piece proposing a temporary 10 percent capital gains tax rate, an alert arrived from the Congressional Budget Office with new graphics and data supporting the general point that capital gains income varies widely from year to year in part because taxpayers frequently have some discretion about the timing when it comes to either realizing or deferring gains.

“Realized capital gains were historically high in 2021 and increased income inequality that year,” the CBO said. “In general, capital gains are more unequally distributed and more variable over time than other major sources of income.”

Monday’s article generated some useful feedback.