Stephen Moore Nails It on Capital Gains Taxes
Stephen Moore has long pushed for lower capital gains rates, and he’s right. As I have written for some time, capital gains are pure double taxation: corporations pay 21% federal (plus state) on profits; shareholders pay again when those profits make stock prices rise or get paid out as dividends. That’s why capital gains rates are lower to begin with. Slashing them pays off because taxpayers become far more willing to sell assets and realize gains instead of sitting on them forever. History proves it: the 1997 cut from 28% to 20% raised revenue 79% in ten years (CBO). The 2003 drop to 15% brought in an extra $100 billion in five years (JCT).
Moore also stresses that local zoning reform is the other half of the housing fix. As I have also been writing for some time, NIMBY barriers—zoning rules, land-use restrictions, permitting delays, and endless red tape—make building slow, scarce, and outrageously expensive. Without tearing down those walls, no amount of demand-side tinkering will bring prices under control. It’s the supply chokehold that’s killing affordability for young families.
On December 2, Moore raised a great point on Fox Business: eliminate federal capital gains tax on primary home sales to free millions of owners to sell and boost supply. He’s directionally right—the current $250k/$500k exclusion leaves huge gains exposed to up to 23.8%, locking people in place. But going all the way to zero won’t raise revenue. Cutting the top rate to 10% would still end most lock-in, unleash transactions, improve labor mobility, and likely bring in more money overall as sales surge. Same pro-housing punch, smarter fiscal result. Republicans should jump on this now.
Solid connection between tax incentives and supply side barriers. The idea of slashing capital gains on primary homes to unlock inventory is smart, but as noted here, a modest rate still keeps the incentive alive without gutting revenue. I've seen neighborhoods where elderly couples stay in oversized houses purely because selling would trigger a huge tax bill despite the exclusion. Pairing that mobility fix with actualy loosening zoning would shift the equilibrium faster than any demand subsidy ever could.