Thursday, January 26, 2012

Redistribution, Baby, Redistribution

From today's the Wall Street Journal:
Remember the moment in 2008 when Charlie Gibson of ABC News asked Senator Barack Obama why he would support raising the capital gains tax even though "revenues from the tax increased" when the rate fell? Mr. Obama's famous reply: "I would look at raising the capital gains tax for purposes of fairness." Well, we were warned.
Q. What sort of president would prefer taking in fewer revenues to the government as long as he could stick it to the "wealthy"?
A. A bad one.

Read the whole thing here.


Blogger steve mcdonald said...

I'm truly concerned that in trying to be "fair" he's not considering the ramifications of what an increase could do. Personally, I'd be in favor of raising the capital gains rate if the corporate rate is lowered to invite more business back into the country, but my assertion is based on simple logic, not considering more detailed economic ramifications (e.g. Could corporations keep retained earnings and grow out of control as they enter new industries?)

Everything government does have some sort of effect on the population as a whole, and most of the time, whatever the government does has an economic effect on not just us, but the rest of the world. I'm concerned that if the capital gains rate is increased alone, investment is curtailed, economic growth is stunted, and more investors look for ways to avoid the additional tax. The tired response that "they'll still invest anyway" isn't selling me, especially in trying times.

January 26, 2012 at 8:51 AM 
Blogger Bob Bohne said...

NPR is running a segment with Temple law professor Alice Abreu. Her field of expertise in income tax law. In her explanation of how this works, she inludes my argument that full time investors should have their investments taxed as income. You can listen to the interview on their web site.

January 26, 2012 at 10:46 AM 
Blogger Bob Bohne said...

I thought this was interesting too. - There was, in fact, only one time that capital gains were taxed at the same rates that were paid by people who earned their money by working. That was during the years 1988 to 1990, as a result of the Tax Reform Act of 1986 — a law championed by President Ronald Reagan.

January 26, 2012 at 10:56 AM 
Blogger Dannytheman said...

Full time investors? So you are good with double taxation?

So Romney pays 35% on the money he makes, let's say he makes 1 million.
1,000,000 Gross.
350,000 tax paid.
650,000 net.

He takes 200,000 of that already taxed money and invests in "stuff!" assuming all the risk that comes with investing. IF he makes any money you want him taxed again on any gain at 35%? OK, what does he get if he loses by investing? Riddle me that Batman? And Tough Luck is not a reasonable answer.
But of course you only pay 15% yourself, but he is rich, right?

January 27, 2012 at 7:16 AM 
Blogger Bob Bohne said...

Danny - I'm not understanding this complaint about Romney paying double taxes. If I draw a paycheck, I pay taxes. If I decide to invest that money in a small business, I pay taxes on any profits that I make. Right?

January 31, 2012 at 12:43 AM 
Blogger steve mcdonald said...

Makes sense to me, Bob. Follow the cash flows. And stop falling for a campaign strategy.

February 1, 2012 at 6:26 PM 

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