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Obama’s Proposed 87% Increase to Capital Gains Tax Exactly What the Economy Doesn’t Need…

with 6 comments

Senator Barack Obama has proposed moving the Capital Gains Tax from its current 15% rate to 28%, an increase in the tax rate totalling a shocking 86.6%. It couldn’t come at a worse time.

While trillions of dollars in capital has disappeared from the markets, adding a dis-incentive for investors to return to the markets is a sure-fire strategy for lengthening the current downturn. And when companies cannot readily access capital, they can’t build new plants, take on R&D expenditures or do all those other things that lead to the people on “Main Street” gaining access to new jobs.

What’s worse is that Mr Obama does not seem to understand the fundamental difference between a tax rate and tax revenue: changes in tax rates lead to changes in the way people behave. For example, Presidents Ronald Reagan, Bill Clinton and George W. Bush all cut the Capital Gains Tax. Under Clinton, it was 28%. Under George W. Bush it sits at 15%. After each of these tax cuts, tax REVENUE actually increased.

The kind of increase Mr Obama proposes therefore has a dual negative effective with no discernible upside: investment capital stays out of the market and government revenues from the Capital Gains Tax shrink.

So why would Senator Obama consider such an ill-fated move? He thinks it’s “fair”.

You can see Mr Obama’s explanation in the video below – note Jim Lehrer, the moderator, attempt three times to explain to Senator Obama that tax revenue decreases as the Capital Gains Tax increases.

Written by westcoastsuccess

October 31, 2008 at 9:24 am

6 Responses

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  1. […] Obama’s Proposed 87% Increase to Capital Gains Tax Exactly What the Economy Doesn’t Need… Senator Barack Obama has proposed moving the Capital Gains Tax from its current 15% rate to 28%, an increase in the tax rate totalling a shocking 86.6%. It couldn’t come at a worse time. While trillions of dollars in capital has disappeared from the markets, adding a dis-incentive for investors to return to the markets is a sure-fire strategy for lengthening the current downturn. And when companies cannot readily access capital, they can’t build new plants, take on R&D expenditures or do all those other things that lead to the people on “Main Street” gaining access to new jobs. What’s worse is that Mr Obama does not seem to understand the fundamental difference between a tax rate and tax revenue: changes in tax rates lead to changes in the way people behave. For example, Presidents Ronald Reagan, Bill Clinton and George W. Bush all cut the Capital Gains Tax. Under Clinton, it was 28%. Under George W. Bush it sits at 15%. After each of these tax cuts, tax REVENUE actually increased. The kind of increase Mr Obama proposes therefore has a dual negative effective with no discernible upside: investment capital stays out of the market and government revenues from the Capital Gains […] […]

  2. I found your blog on google and read a few of your other posts. I just added you to my Google News Reader. Keep up the good work. Look forward to reading more from you in the future.

    Mike Harmon

    October 31, 2008 at 9:45 am

  3. […] are incompatible: over 100,000,000 Americans will be affected by your 33% tax increase (which you’ve previously said you’d ultimately raise to 28%, which would be a total tax increase of 87%). People who are […]

  4. […] big surprise there, given that President-elect Obama has promised to increase the Capital Gains tax by 33% (that’s just to start; his stated ultimate goal is a roughly 87% increase in the tax on your […]

  5. […] we previously reported, President Obama campaigned on a promise to increase the capital gains tax from its current 15% to, […]

  6. i need hlpe frme the word

    Godwin

    February 28, 2012 at 1:25 pm


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