Savings and Investment: The Tax Treatment of Stock and Retirement Accounts in the OECD by Daniel Bunn and Elke Asen published by Tax Foundation (5/2021).
There are two layers of tax on investment income. First, corporations pay the corporate income tax on their profits. Second, shareholders pay an income tax on the dividends they receive (dividends tax) and capital gains they realize (capital gains tax).
On average, in the OECD, long-term capital gains from the sale of shares are taxed at a top rate of 19.1 percent, and dividends are taxed at a top rate of 24.4 percent.
To encourage long-term retirement savings, countries commonly provide tax preferences for private retirement accounts. These usually provide a tax exemption for the initial principal investment amount and/or for the investment returns.
Tax-preferred private retirement accounts often have complex rules and limitations. Universal savings accounts could be a simpler alternative—or addition—to many countries’ current system of private retirement savings accounts.
