ABSTRACT
The development of federal tax policy changed dramatically in the mid-1970s for two interrelated reasons, both of which took some time in becoming generally apparent. The first was a shift from an economic environment of strong, steady growth to one of slow, sometimes hesitant growth. The second fundamental shift beginning in the mid-1970s was one away from tax policies aimed mainly at demand management, widely known as Keynesian policies, to ones focused more and more on supply management. Under the federal individual income tax, realized capital gains were taxed as ordinary income from 1913 to 1921 and again from 1987 to 1990. The capital gains story is replete with unresolved economic and fiscal issues of considerable importance to the welfare of the country. The economic effects of social security also depend on public perceptions of the true nature of the federal system.
