After all, doing so makes no sense when the data are soberly and objectively examined, which requires starting the examination from the position of the rich, not the poor.
Let's try that experiment.
- The current top capital gains and income tax rate is 20% for rich couples (those earning $450k+) and for rich singles (those earning $400k+).
- Investment income currently is subject to an additional 3.8% tax (thank you, Obamacare).
- The curent combined tax rate for rich people is 23.8%.
Now, the capital gains tax is a tax on the sale of an investment. So, what is a rich person going to do when Congress raises the capital gains tax? The answer doesn't require a whole lot of thought: The rich person will retain not sell his or her assets to preserve wealth rather than fork it over to the federal government. Thus, revenue to the federal goverment decreases.
In his State of the Union Address, President Obama announced that he wants the rate on capital gains and dividends raised to 28%. That's a 4.2% increase in taxes which, the President believes, will bring more revenue into the federal government that he can then distribute through his new "social programs" (aka, "vote getters").
Should that 4.2% pass Congress and be signed into law by the President, what are the rich folks going to do?
This isn't the stuff of rocket science.
But, that's not all.
President Obama actually believes that increasing the capital gains and dividends taxes will only impact the rich. That's because the President uses "static scoring," meaning that he doesn't consider how changes in tax policy impact economic behavior just how much more or less revenue will flow into the Treasury.
Using "dynamic scoring"--which does coonsider how changes to tax policy impact economic behavior--the folks over at the Tax Foundation have found that the President's proposal:
- will lower the after-tax incomes of all groups, not just the rich;
- federal revenues will fall, not raising the $20B that static scoring predicts but losing $12B in revenue;
- the nation's GDP will lose $142B/year; and,
- wages will decrease, resulting in $461 less/year for families earning between $50k-$75.
That's really taking care of the middle class, isn't it?
Talk all he wants about "helping the middle class," the President's economic policy of redistributing wealth from the nation's rich to its poor will hurt the people he's proposing to help. Not only that, the President's policy will shrink the economy and decrease wages for all, effects that are masked by static scoring models but unmasked by dynamic scoring.
Let the discussion begin...
To read the Tax Foundation report, click on the following link: