Back in 2008 when Obama was debating Hillary Clinton on national TV, Obama noted that raising the capital gains rate would likely reduce federal revenue collections, but insisted it was good policy anyway — because it was a policy of “fairness”.
Why would raising the capital gains tax be a revenue loss? The effect of higher taxes on jobs and income would slow the economy. The two sides of the equation are the ones who think that a loss of jobs is worth the potential increased revenue, while others insist that the any positive revenue amounts would be fairly small and not worth the damage to jobs and the economy.
Certainly, at a time like this in our country when the economy is quite sluggish and unemployment is high, the last thing we need is a policy that hurts more jobs and income. Yet such a policy was just implemented. A hike in capital gains makes it more expensive for a business to raise the capital it needs to operate. What’s more, couple that with the new 3.8% surtax on investment income that begins here in 2013 (from the Obamacare legislation) and you have now an 8.8% tax hike for some people. Throw in the hike on those who make over $400k/$450K and you have even more taxes – on the very type of taxpayers who have money to create jobs and/or invest.
One has to wonder if the budget scoring being done by the Congressional Budget Office (CBO) on this tax will actually bill it as revenue collected, even though economists –and Obama — acknowledge it as a revenue loss.
The capital gains rate hike was a ruse, a shell game. Any revenue raised will be offset by slower economic growth. Is it worth it? Right now? It’s a shame for this country that Obama continued to push for a policy that would have a negative effect on jobs and the economy in an effort to promote “fairness through taxation” and try to level the field on his terms.
Crossposted at alanjoelny.com