Taxes and the Myth of Fairness
April 21st, 2008 at 11:14am KMorrison
In the Democrat’s ABC debate Senator Obama stated he would raise the Capital Gains Tax even though it would adversely effect the economy because of ‘fairness’. Senator McCain, and Republicans in general, favor keeping this tax rate low because it has been concusively proven that a high Capital Gains Tax slows the economy, and that the government actually takes in more in money when the rate is kept low, as people will invest less if the tax rate is burdensome. Senator Obama’s statement points out the trouble Democrats have with economics. The idea that increasing tax rates on the wealthy, particularly when the economy is sagging, because of fairness shows a lack of economic understanding. An increase in taxes slows economic growth. The people hurt most by a struggling economy are middle to lower middle class people who are already working hard to make ends meet. The wealthy will still be wealthy, but middle class workers will struggle. This is strikingly unfair.
The rationale behind keeping taxes low on the upper class has been explained and marketed poorly. The term ‘trickle down economics’ has a demeaning ring to it. The idea that the rich pay too much, does not engender sympathy. Few have been given a clear explanation about why low taxes stimulate growth. However, one would hope presidential candidates would understand how taxes effect the economy. Senator Mccain has been the only candidate to date to show this understanding. What’s fair for the American people of all classes is to have a president that understands how the economy works, and has an intelligent plan to put the economy back on solid ground.
Entry Filed under: Uncategorized
3 Comments Add your own
1. congressive | April 21st, 2008 at 10:38 pm
I was disappointed that Obama didn’t call out Gibson on his big giant sandbag. Sliced and carefully parsed, cutting capital gains taxes increases capital gains revenues. But this on the whole is a lie to say cutting capital gains raises revenue. It does not.
CEO millionaires can choose how they are to be paid. When Steve Jobs takes one dollar as salary, and the rest of his compensation as stock, he is paying salary taxes on one dollar and 15% on hundreds of millions of dollars of non-salary stocks. Even when his stocks go underwater, they just re-vest him again, so he’s gonna make millions. This is no accident.
Dropping capital gains tax forces a shift in compensation away from million dollar salaries, the sum total long range effect is a DROP in overall taxes, wages AND capital gains, from millionaires, but not from working stiffs. Working stiffs can’t pull off this neat little trick and must pay the higher amount.
If cap gains were to drop to ten percent, there would be another rush to cash out and take advantage of the drop, resulting in a quick increase in cap gains tax collected, but long range even more boardroom cronies would shift their salaries away from the higher “wages” designation and into the lower “capital gains” column, once again leaving the working class holding the bag.
Low taxes stimulate millionaire growth, not the whole economy. Higher taxes during Clinton’s administration (thanks to GHW Bush who raised them) not only didn’t hurt the economy, but contributed to the floating of all boats. Bush’s cut after cut after cut should have resulted in the most affluent nation on earth, but in fact we work over four hundred and fifty hours MORE per year than Norway, but make over five thousand bucks LESS per year, and their overall tax revenue as a percentage of GDP was 43.6 percent.
Trust John McCain when HE says he doesn’t know much about economics. He doesn’t. Unless you’re calling him a liar.
2. KMorrison | April 22nd, 2008 at 9:27 am
Raising taxes when the economy is strong is different that raising taxes when the economy is struggling. Basic Econ 101 will tell you that raising taxes in a sluggish economy is harmful and erases any potential for a recovery. My arguement isn’t that it’s ‘fair’ that the wealthy have more options, it’s that ‘fairness’ is irrelevant. The middle class is hurt proportionally much more than the rich when the economy is poor. A plan based on an unfounded ‘fairness’ argument which actually sticks it to the middle class in the end shows an inability of some Dems to understand basic economic principlals.
3. Eric T | April 22nd, 2008 at 8:20 pm
I think Ceo’s getting paid by with stock is good motivation to make the stock perform. If they were paid a salary that is not tied to the performance of the company, if they run the company into the ground they still would get the same pay. The performance based pay is good for CEO’s to make sure they can make the companies stock continue to grow and be a good place for investors to put money from pension fund, IRA’s, 401k’s and get a decent return.
If anyone trades stocks, you know that you take a big risk. Many times you lose money. If you are sucessful, why should you have to give the government more. If I take the risk and lose the government ain’t there wanting to share the loss and refund me for the loss. Taxing the gains will discourge people from stock trading.
Leave a Comment
Some HTML allowed:
<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <code> <em> <i> <strike> <strong>
Trackback this post | Subscribe to the comments via RSS Feed