Capital gain is the amount by which an asset's selling price exceeds its initial purchase price. A realized capital gain is an investment that has been sold at a profit. For most investments sold at a profit, including mutual funds, bonds, options, collectibles, homes, and businesses, the IRS is owed money called capital gains tax.

tax revenue - government income due to taxation

1.  What is the main idea of economics professor Thomas Sowell's commentary?

2.  Dr. Sowell makes the following statements in his commentary.  Ask a parent if he/she does or does not believe each of these assertions/facts, and to explain his/her answer:

• "Reductions of the capital gains tax rates in 1978, 1997 and 2003 all led to increased revenues from that tax." (from para. 3)
• "In a worldwide context, during the 20th century economic central planning by governments...led to so many bad consequences, in countries around the world, that even most socialist and communist governments abandoned central planning by the end of that century." (para. 5)
• "A market economy with many competitors has incentives and constraints that are the opposite of those in a government monopoly." (para. 11)
• "Anyone familiar with the economic history of businesses knows that their mistakes have been common and large. But red ink on the bottom line lets them know that they are going to have to shape up or shut down.  Government agencies face no such constraint. The Federal Reserve can keep making the same mistakes in the next hundred years that it made in its first hundred years. Or it can make new and bigger mistakes.' (para. 12-13)