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• 1. Joe  |  November 1st, 2008 at 7:06 am

  KM… since you are just cutting and pasting an interview without actually defending it, here is a response:

  Center on Budget and Policy Priorities
  Cutting capital gains rates reduces revenues over the long run. That’s the conclusion of the federal government’s official revenue-estimating agencies, as well as outside experts and the Bush Administration’s own Treasury Department.

  – The non-partisan Congressional Budget Office (CBO) and the Joint Committee on Taxation have estimated that extending the capital gains tax cut enacted in 2003 would cost $100 billion over the next decade. The Administration’s Office of Management and Budget included a similar estimate in the President’s budget.

  – After reviewing numerous studies of how investors respond to capital gains tax cuts, CBO commented that “the best estimates of taxpayers’ response to changes in the capital gains rate do not suggest a large revenue increase from additional realizations of capital gains — and certainly not an increase large enough to offset the losses from a lower rate.”

  – The Bush Administration Treasury Department examined the economic effects of extending the capital gains and dividend tax cuts. Even under the Treasury’s most optimistic scenario about the economic effects of these tax cuts, the tax cuts would not generate anywhere close to enough added economic growth to pay for themselves — and would thus lose money.

  One reason is that preferential tax rates for capital gains encourage tax sheltering, by creating incentives for taxpayers to take often-convoluted steps to reclassify ordinary income as capital gains. This is economically unproductive and wastes resources. The Urban-Brookings Tax Policy Center’s director Leonard Burman, one of the nation’s leading tax experts, has explained, “shelter investments are invariably lousy, unproductive ventures that would never exist but for tax benefits.” Burman has concluded that, “capital gains tax cuts are as likely to depress the economy as to stimulate it.”

  And why does McCain/Bush and the GOP like Capital Gains tax cuts???
  From the same article…

  Middle-income families derive only a miniscule benefit from the 2003 cuts in capital gains and dividends.

  Charles Gibson’s second statement — that 100 million Americans own stock and would be affected by a change in the capital gains tax rate — also is mistaken.

  – Most middle-income Americans own much or all of their stock through 401(k)s, IRAs, or other tax-preferred saving accounts. They do not pay taxes when their stocks within those accounts go up, so a change in the tax rate doesn’t affect them.

  – Even among the minority of middle-class Americans who do benefit from the capital gains and dividend tax cuts, the benefits are very small. This is because capital gains and dividend income is highly concentrated at the very top of the income scale. The Tax Policy Center estimates that the highest-income 5 percent of U.S. households receive 83 percent of total capital gains income.

  – According to the Tax Policy Center, the average household in the middle of the income spectrum received $20 from the 2003 capital gains and dividend tax cuts. The average household earning over $1 million received $32,000, or 1,600 times as much.

  And in conclusion…

  The myth that tax cuts pay for themselves hinders a debate on the nation’s budget priorities — and its serious long-term budget problems and the tough choices we must make to address them — by creating the illusion of a free lunch. Such free lunches do not exist. Capital gains tax cuts either make the nation’s daunting long-term budget problems even more severe or consume scarce resources (primarily to the benefit of the most well-off) that could otherwise be used for purposes such as moving toward universal health coverage or improving the educational system.

• 2. Joe  |  November 1st, 2008 at 7:49 am

  Hmm… lower taxes, but tax health benefits.

  Analysts note that McCain’s plan could shift the amount of money an employer currently pays for a worker’s health care from a tax-free benefit to part of the employee’s salary. As such, it would increase the amount that would be taxed and, in some cases, bump the employee into a higher tax bracket. The nonpartisan Tax Policy Center cites this example: A single worker making $75,000 and receiving $7,000 in healthcare premiums currently is in the 25 percent tax bracket. McCain’s plan, the center says, would push that worker’s taxable salary to $82,000, which is in the 28 percent tax bracket.

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