The share of taxable corporate stock in the United States has drastically dwindled, and it may be reason to rethink how the country taxes these holdings, including Americans' retirement holdings. At least that's what a recent Tax Policy Center study says.

The study from the non-partisan Center found that the share of U.S. corporate stock held in taxable investment accounts fell more than two-thirds over the last 50 years, from 83.6 percent in 1965 to 24.2 percent in 2015. As a result, the U.S. government is collecting a much smaller share of tax revenue from the stock holdings of U.S. investors.

How did we get here? I recently spoke to the study's authors, Steve Rosenthal, a senior fellow in the Urban-Brookings Tax Policy Center at the Urban Institute, who researches, speaks, and writes on a range of Federal income tax issues, with a particular focus on business taxes, and Lydia Austin, a research assistant in the Urban-Brookings Tax Policy Center at the Urban Institute, where she manages the Tax Facts database and works on the briefing book, among other projects. They explained the two major factors driving the decline in the share of corporate stock held in taxable U.S. accounts.

"The first is the increase in tax-favored retirement accounts, such as IRAs, 401(k) plans, and traditional defined-benefit pension plans," Austin explained. "We estimate these types of investments now account for about 37 percent of U.S. corporate stock ownership.

"The second is the increase in portfolio investments by foreign investors. That share is about 26 percent of corporate stock (the foreign share would be greater if we included foreign direct investment, which is a controlling interest in a U.S. corporation of 10 percent or more)," she continued. "Foreigners generally pay no U.S. taxes on capital gains from the sale of U.S. corporate stock, and the taxes the U.S. withholds on their dividends are often reduced greatly by treaty."

Because of the trends in stock ownership and the resulting reduction in tax rates, the two say that corporate earnings now face a very low effective tax rate at the shareholder level. In fact, by their estimates, three-fourths of total U.S. corporate earnings currently go untaxed. And that gets compounded when one considers that taxes on any gains can be deferred or eliminated if the stock is held until death or donated to charity.

"We simply are not taxing capital very much in this country. We tax workers pretty heavily, and we tax capital pretty lightly, and what really looms large is the shift from the taxable account to retirement savings," Rosenthal explained. "It allows individuals to shift their savings from the taxable pocket to the non-taxable. That change has been driven by tax law changes, and it has led to the U.S. greatly subsidizing our retirement accounts. We've increased the amount that can be contributed, but we've also increased the income limit, which helps more affluent people who are in better position to contribute to those accounts."

As one can imagine, the lost revenue needs to be made up somewhere. The question is how do we do it? Rosenthal has an idea, but it's probably not going to win him, or any politician that were to run on this platform, any friends.

"We're going to need to look at taxing retirement savings more rigorously," Rosenthal stressed. "By and large, the tax policy underlying retirement taxes is trickle-down. Who is responsible for the expansion? Where are the benefits going? We need to answer these questions."

Rosenthal states that desperate times seem to call for desperate measures, and grasping what's often been a third rail of American politics just may have to happen. But he also has an alternative that could be a bit more palatable to the everyday American, if not American businesses.

"I think there are two separate approaches we could take: One is trying to tax not-for-profits or holdings in retirement savings. Politically, though, that could prove very difficult," he said. "Or alternatively, we could bolster taxes at the corporate level and ensure that corporates cannot exploit loopholes, like earnings stripping, transfer pricing, or inversions."