Should the capital gains in the US tax be repealed?

Sonar Pro

Vote: No

Capital gains taxes should not be repealed because they are a vital revenue source for federal funding of public services, infrastructure, and debt reduction, with ongoing adjustments like 2026 inflation-indexed thresholds (0%, 15%, 20% rates) providing targeted relief without elimination[1][4]. Repeal would exacerbate budget deficits, as seen in Missouri's state-level experiment costing $350 million annually while preserving federal taxes, and voter rejection of Washington's capital gains tax repeal (63% kept it)[5]. Proposals like Project 2025 suggest lowering rates or indexing to inflation rather than full repeal, indicating even pro-growth plans retain the tax[4]. Existing mitigations—lower long-term rates (max 20%+3.8% NIIT vs. 37% ordinary income), step-up basis at death, 1031 exchanges, and home sale exclusions—already reduce lock-in effects and double taxation without needing abolition[2]. Full repeal primarily benefits high-income asset holders, risking inequality, while current structure balances incentives and fairness.

GPT-5.4

Vote: No

Repealing capital gains tax would overwhelmingly benefit high-wealth households, because capital gains are concentrated among top-income investors. That would reduce tax progressivity and likely widen after-tax inequality. It would also create a large revenue loss. Unless offset elsewhere, that means higher deficits or higher taxes on labor, consumption, or future generations. A lower rate than ordinary income can be defended to encourage investment and account for inflation and risk, but full repeal goes too far. It would distort tax planning even more by encouraging compensation and business income to be recharacterized as untaxed gains. If the goal is better investment incentives, there are narrower reforms: index gains for inflation, reduce lock-in, or improve treatment for long-term productive investment. Repeal is a blunt, inequitable, and fiscally costly solution.

Grok 4.1 Fast

Vote: No

Repealing the capital gains tax would create a massive revenue shortfall—estimated at $200-300 billion annually—exacerbating the US's already ballooning $35 trillion national debt and forcing cuts to essential services like Social Security, Medicare, and infrastructure, or hikes in other taxes that burden the middle class. Capital gains tax promotes fairness by ensuring that investment income from assets (often held by the top 1%) is taxed, countering extreme wealth inequality where the richest 0.1% hold 14% of wealth. Without it, windfall profits from stocks and real estate would go untaxed, widening the gap. Economically, it discourages reckless speculation and bubbles (e.g., dot-com, housing crisis), stabilizing markets. Lower rates have been tried, but full repeal distorts incentives toward untaxed asset hoarding over productive investment, harming long-term growth per IMF and CBO analyses.

Gemini 3.1 Pro

Vote: No

Repealing the capital gains tax would profoundly exacerbate wealth inequality in the United States. Capital assets are heavily concentrated among the wealthiest individuals; eliminating this tax would essentially allow the richest Americans to accumulate vast amounts of wealth completely tax-free, while working-class citizens continue to pay high taxes on their hard-earned labor. Furthermore, the capital gains tax provides hundreds of billions of dollars in essential federal revenue. Repealing it would blow a massive hole in the national budget. This would inevitably lead to severe cuts in public services, infrastructure, and social safety nets, or significantly drive up the national debt to unsustainable levels. Finally, completely eliminating the tax creates a fundamental unfairness in the tax code. It establishes a system where income derived from simply holding wealth is entirely exempt from societal contribution, whereas income derived from physical and mental labor is heavily taxed. Maintaining a capital gains tax is crucial for a balanced, fair, and functional economic system.

Claude Opus 4.6

Vote: No

The capital gains tax should not be repealed for several compelling reasons. First, repealing the capital gains tax would overwhelmingly benefit the wealthiest Americans. The top 1% of earners receive the vast majority of capital gains income. Eliminating this tax would dramatically widen wealth inequality, as the wealthy would accumulate assets tax-free while working Americans continue to pay income taxes on their wages. Second, eliminating the capital gains tax would create a massive hole in federal revenue — estimated at hundreds of billions of dollars over a decade. This would either balloon the deficit or force cuts to essential programs like Social Security, Medicare, defense, and infrastructure. Third, without a capital gains tax, there would be a strong incentive to reclassify ordinary income as capital gains, creating enormous distortions in the tax system. Executives and business owners would restructure compensation to avoid taxation entirely, eroding the income tax base further. Fourth, the argument that capital gains taxes discourage investment is overstated. Historical evidence shows that periods with higher capital gains tax rates (such as the 1990s) coincided with robust economic growth and investment. The relationship between capital gains tax rates and investment is far more nuanced than repeal advocates suggest. Finally, capital gains already receive preferential treatment — they are taxed at lower rates than ordinary income and benefit from step-up in basis at death, which eliminates taxation on gains entirely for heirs. These existing preferences already provide substantial incentives for investment. Full repeal goes far beyond what is needed to encourage productive economic activity. Rather than repeal, reform — such as indexing gains for inflation or adjusting rates — would be a more balanced approach that maintains fairness while supporting investment.

Kimi K2.5

Vote: No

Repealing the capital gains tax would blow a massive hole in the federal budget, eliminating roughly $200 billion in annual revenue that funds infrastructure, healthcare, and national defense. This shortfall would inevitably force tax increases on labor income or draconian spending cuts, shifting the fiscal burden from wealthy investors to ordinary wage earners who lack the flexibility to reclassify income. The distributional impact is stark: the top 1% of households capture approximately 75% of all capital gains income. Full repeal would function as a massive upward redistribution of wealth, exacerbating inequality while providing minimal benefit to middle-class families whose primary wealth is tied up in tax-sheltered retirement accounts. It privileges wealth over work by allowing passive investment income to go entirely untaxed while doctors, teachers, and engineers pay marginal rates up to 37%. The economic efficiency arguments for repeal are overstated. The "double taxation" claim ignores that corporations are separate legal entities with distinct rights and liabilities. Zero capital gains rates would create perverse incentives for tax avoidance, encouraging high earners to convert ordinary compensation into capital gains through sophisticated financial engineering. Moreover, economic evidence shows weak correlation between capital gains rates and investment levels; business formation depends more on demand, technological opportunity, and infrastructure quality than on tax treatment of secondary market sales. Rather than outright repeal, policymakers should reform capital gains taxation to eliminate the carried interest loophole, tax unrealized gains at death by eliminating stepped-up basis, and potentially mark liquid assets to market annually. These targeted reforms maintain necessary revenue while improving efficiency and fairness. Full repeal abandons progressive taxation principles and the social contract that requires those who benefit most from our economic system to contribute proportionally to its maintenance.

Final Summary

The AI Roundtable reached a swift and unanimous consensus, with all six models firmly opposing the repeal of the capital gains tax. Led by rigorous fiscal critiques from Kimi K2.5 and Claude Opus 4.6, the group argued that a repeal would create a massive revenue vacuum and shift the tax burden unfairly onto labor rather than wealth. Even with the option to change their minds, models like GPT-5.4 and Sonar Pro remained steadfast, concluding that the current system's preferential rates already offer enough investment incentive without needing to abandon the tax entirely.

All 6 models agreed on "No" after discussion

Strongest Arguments

• No: The most compelling argument centered on the fundamental unfairness of the 'wealth vs. labor' divide: repealing the tax would allow passive investment income to go entirely untaxed while ordinary wage earners—like teachers and engineers—would be forced to shoulder the nation's fiscal burden through higher taxes on their actual work.