Once again the Obama people have said he would consider holding off on raising taxes on the "wealthy" while the economy is limping. This makes me wonder about something.
On the campaign trail, Sen. Obama said that raising taxes wasn't about punishing anyone but about "fairness." He's concerned about this "fairness" even if raising taxes lowers government revenues.
But if we're not raising taxes to bring more money into the government for necessary expenditures, and if raising taxes is bad for the economy, why raise taxes?
What is "fair" about taking money away from someone with no benefit to anyone?
It's often said that conservatives are concerned with equality of opportunity and liberals with equality of outcome. I guess if they don't know how to make everyone equally happy, they can make everyone equally unhappy.
So maybe Rush Limbaugh's right -- liberal economic policies are about equal distribution of misery.
On the campaign trail, Sen. Obama said that raising taxes wasn't about punishing anyone but about "fairness." He's concerned about this "fairness" even if raising taxes lowers government revenues.
But if we're not raising taxes to bring more money into the government for necessary expenditures, and if raising taxes is bad for the economy, why raise taxes?
What is "fair" about taking money away from someone with no benefit to anyone?
It's often said that conservatives are concerned with equality of opportunity and liberals with equality of outcome. I guess if they don't know how to make everyone equally happy, they can make everyone equally unhappy.
So maybe Rush Limbaugh's right -- liberal economic policies are about equal distribution of misery.
3 comments:
I think most economists recognize that the relationship between lower taxes and higher revenues is more complex than you portray it.
Lowering the capital gains tax will usually produce a short term increase in capital gains tax revenue because it provides a greater incentive to sell assets that have gained in value. By the same token, raising it will usually produce a short term decrease in capital gains tax revenue because it provides a new incentive to hold assets that have gained in value.
The exact opposite effect would be seen with the estate tax. Lowering it would not provide any greater incentive for people to die and hence would not increase revenues.
Obama has propose returning rates to the level they were under Clinton when the government ran a budget surplus. Many people benefitted in that economy. Only Rush was miserable.
Obviously the estate tax is different from income taxes (though lower tax rates may result in fewer attempts to get around paying taxes even here), but I think you're missing something in your remark about raising capital gains taxes.
Raising cap gains doesn't just create a temporary incentive to hold on to your assets. It makes all investment less profitable.
Besides that, a dollar that is taken out of the economy and given to the government does not come out the other side as a dollar. I don't remember actual numbers, but the government has the highest "overhead" around. Private industry is more efficient with money. It also uses that money to create more wealth. (I saw one estimate that $1 in the hands of industry creates $5 of value.)
When government takes money it creates only a disincentive to achieve and more people with an attitude of dependency on government handouts.
This comment about the Clinton years is very popular among liberals, but it fails to take into account that this only occurred after a Republican Congress forced a balanced budget on him.
And Rush (whom I rarely listen to) was at the height of his popularity then.
This comment about the Clinton years is very popular among liberals, but it fails to take into account that this only occurred after a Republican Congress forced a balanced budget on him.
That comment is very popular among conservatives but it fails to take into account how recklessly the Republican Congress abandoned the balanced budget once Bush got into office.
Raising cap gains doesn't just create a temporary incentive to hold on to your assets. It makes all investment less profitable.
Actually, lower capital gains tax creates an incentive for corporations to do less investment and pay out more profits in the form of dividends and stock buybacks. The decline in America's manufacturing economy took place after Reagan cut capital gains taxes in the early 1980's. Lower capital gains taxes change the incentives for CEO's from the long term health of the company towards short term stock gains.
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